Citizens Advice has welcomed the news that BrightHouse has committed to reimburse £14.8 million to customers for offering rent-to-own deals on household goods without the proper affordability checks.
Previous research by the charity has found that one in five rent-to-own customers spent 20% or more of their income on payments, and more than half had to take on other debts to cover the costs.
Citizens Advice has called for the FCA to improve affordability checks for rent-to-own customers to prevent people from being offered agreements they can’t afford.
In addition to action to help people when they are in debt, the charity is asking for more protection for people against unaffordable lending. The charity is also asking the payday loan cap to be extended to all forms of high cost credit - meaning that no one would pay more than twice what they borrowed in interest and charges.
Gillian Guy, Chief Executive of Citizens Advice, said:
“Citizens Advice has long called for the Financial Conduct Authority to take action on poor affordability checks on rent-to-own deals, which can trap people in debt.
“In the last 12 months, Citizens Advice helped people with more than 13,000 rent-to-own issues where people were struggling to make repayments for essential goods like fridges and washing machines.
“We’re pleased to see that the FCA are taking action against BrightHouse whose loose lending practices have pushed the very people who can least afford it further into financial difficulty.
“Citizens Advice is calling on the FCA to tighten up credit checks across the rent-to-own sector to prevent people getting caught in a debt spiral.”
Related information from the FCA: Rent-to-own provider BrightHouse to provide over £14.8 million in redress to around 249,000 customers
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