Off The Hook For Now? Swedish Authorities Conclude Investigation Against Klarna

November 19, 2021
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The Swedish Financial Supervisory Authority (Finansinspektionen - FI) has “written off” its investigation into the buy now, pay later kingpin.

The Swedish Financial Supervisory Authority (Finansinspektionen - FI) has “written off” its investigation into the buy now, pay later (BNPL) kingpin.

As Klarna has got bigger, so has the regulatory scrutiny from the authorities.

However, it had some good news this week as Sweden’s FI has concluded that the clarifications and measures presented by the bank are sufficient to correct the shortcomings that it had previously pointed out.

This is after the FI told Klarna in January that the authority had initiated an investigation with the aim of assessing how the bank's management, follow-up and internal reporting of credit risks comply with applicable regulations.

This required the fintech to submit documentation to the regulator, as well as allow interviews with relevant employees.

After a number of back and forth correspondence in the following months, the FI assessed that the clarifications and measures presented by Klarna are sufficient to rectify the deficiencies.

Therefore, it said that there is no reason for it to take further measures in its investigation.

This, however, is still not the end of the line for Klarna and its relationship with its home country supervisor.

The FI is also investigating its governance, having announced in March that it is looking at the effectiveness of the company's processes for managing information and cybersecurity.

In July, the FI also announced that it would investigate Klarna as to whether it violated bank secrecy in relation to an information technology incident in May this year.

This incident resulted in customers being able to access information about each other for a limited period.

Grow, Grow, Grow

In spite of increased regulatory scrutiny, the company continues to grow fast in Europe and North America.

When Klarna first entered the market in 2014, it effectively created the concept of BNPL, the spokesperson told VIXIO earlier this week.

On Thursday, it launched in Portugal. As of Thursday (November 18), consumers in Portugal will be able to shop online and split their purchases into three interest-free equal payments through both the Klarna app and when checking out at retailers with which the company has partnered.

The BNPL firm has also recently rolled out its services in Ireland.

On the dawn of its launch in Ireland, its spokesperson told VIXIO that it welcomed the prospect of regulation in the country, stating that “for over a year now we have been calling for regulation because the market has grown more complex for consumers”.

In recent proposals around BNPL regulation in the UK, they said, “we would agree with the protections proposed by the government, which includes access to a Financial Ombudsman”.

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