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BrightHouse rent-to-own firm pays 14.8m in redress.

BrightHouse rent-to-own firm pays 14.8m in redress.

Britain’s biggest rent-to-own retailer, BrightHouse, faces a £14.8m bill to compensate nearly 250,000 customers as part of a clampdown on the sector by Britain’s financial regulator.

The Financial Conduct Authority (FCA) found that BrightHouse had not acted as a “responsible lender” and has ordered the company (which supplies household goods such as TVs and washing machines on high-cost credit to people who cannot access more usual credit facilities) to pay £14.8m to 249,000 customers.

The FCA said 81,000 BrightHouse customers, whose ability to repay their loan had not been assessed properly and had been forced to hand back the goods, will now be repaid. They will receive the interest and fees charged, plus compensatory interest of 8%.

Customers who kept the goods will have ownership transferred to them, with their balances written off. This part of the compensation totals £10.1m and covers agreements made between 1 April 2014 and 30 September 2016.

Customers who cancelled a loan agreement after making the first repayment but before they received the goods will get that payment back plus compensatory interest of 8%. This ruling will result in BrightHouse paying £4.7m to 181,000 customers who signed up after 1 April 2010.

BrightHouse chief executive Hamish Paton said: “We sincerely apologise to those customers who were affected. Our top priority is to ensure that they are reimbursed as soon as possible. We’re absolutely determined that this doesn’t happen again and have made significant improvements over the last 18 months.”

The company said it would write to 213,000 past and current customers by the end of the year to explain what they are due.

According to BrightHouse, customers who cancelled agreements after the first down payment will receive £27 each on average. Those whose affordability checks were inadequate and who returned the goods will get £147 on average.

A report last year by an independent think-tank found that the cheapest washing machine at BrightHouse cost £1,056.12 over three years, including product insurance. The cheapest similar product on the high street was £250, or £350 with delivery and three-year breakdown plan.

Citizens Advice said it had helped people with more than 13,000 rent-to-own issues in the last 12 months, where people were struggling to make weekly repayments for essential goods like fridges and washing machines.

It's chief executive, Gillian Guy, said: “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.”

To discuss this or any other matter relating to consumer law please contact Kelly Henderson on 01325 466461 or email kelly.henderson@close-thornton.co.uk

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