Klarna boss says Brussels has produced some of ‘the worst regulation ever created’
The boss of buy-now pay-later (BNPL) giant Klarna says Brussels has held back fintech firms with prescriptive rules and produced some of the “worst regulation ever created”.
Speaking at the Innovate Finance Global Summit today, Sebastian Siemiatkowski said he had been “deeply involved” with regulators and politicians on the continent but had not been “blown away” by their approach to financial regulation.
“Know-your-customer (KYC) and anti-money-laundering (AML) is the worst regulation ever created,” he said.
“It is so prescriptive, it is poor, it doesn’t serve its purpose. And a lot of the regulation that has come out of Brussels has been like that.”
KYC and AML regulation was introduced by the EU to prevent money laundering and stem the flow of cash into terrorist financing.
UK firms ceased to sit directly under the rules after Brexit and lost their access to simplified due diligence checks afforded to members of the bloc.
But Siematowski argues that the regulatory benefits of leaving have provided a boost to the fintech ecosystem in the UK.
“What I’ve seen in the UK – which makes me very excited – is this amazing moment and drive and interest to take away some of the bad practices from Brussels in Europe, and actually write out regulation that keeps in mind that the strongest force is the customer,” he said.
“There’s such a tremendous momentum around that and to some degree, customers know how to find stuff. The UK has a model that is right.”
Discussing Klarna’s relationship with politicians in the UK, Siematowski said he hoped to win over sceptics of the firm in the UK and said that politicians had misunderstood Klarna’s offering..
“I think as a politician some people immediately only focus on our current product or challenges – and we do need to work on them and improve them,” he said.
“But I do think that the credit I provide is quite reasonable, attractive and stocked and constructed in a way that’s healthy.”
It comes amid growing concern over the impact of BNPL products in plunging consumers into debt, with regulators and politicians readying to clampdown on the industry this year following a review by former FCA boss Chris Woolard last year.
Labour MP Stella Creasy has called for a clampdown on the sector.
“You’ve already got a smouldering fire of debt, and there were people before the pandemic who were using credit cards and high-cost loans to cover their costs – who were already spinning and juggling,” she said last year.
“And into that picture has come a new form of credit, that is being aggressively marketed and shoved down their throats, without any protection at all.”
Siematowski said that his aim was to win Creasy round to the firm.
“She cares about, good outcomes for people. And so my ambition with her is be on your side and to continuously try to explain what we’re trying to do and how we do it,” he said.