Bought from BrightHouse? Good news...

YOU COULD BE IN FOR A PAYOUT FOLLOWING STORE PROBE

Reporter ‘RENT-TO-OWN’ electronics and homeware chain BrightHouse has been ordered to pay nearly £15m compensation to 249,000 customers it sold unaffordable lending agreements to.

The Financial Conduct Authority’s (FCA) investigation found BrightHouse sold deals to customers which “may not have been affordable” and payments “should have been refunded”.

Now it must write to affected customers and inform them that their balances are being paid off, they are owed compensation, or both.

BrightHouse – which has a string of stores in the North East – offers customers household appliances and furniture for sale through monthly payments.

It has been working with the FCA since 2014, after the watchdog found the firm was not carrying out stringent enough checks to make sure customers could afford their payment plans.

The FCA said that the group “did not always deliver good outcomes for customers, particularly those who were at a higher risk of falling into financial difficulty”.

BrightHouse has “identified customers that may have been treated unfairly where its processes fell short of FCA expectations” and has committed to “putting things right” for these customers.

Customers who were not properly assessed ahead of being offered a loan who then struggled to make payments and handed back their goods will be paid back the interest and fees they paid, and be awarded compensation. Those who kept their goods will have their balances written off. That totals £10.1m for 114,000 agreements entered into between April 1, 2014, and September 30, 2016, covering 81,000 customers.

Those customers who made the first payment due under an agreement with the firm which was cancelled before their products were delivered will be refunded by BrightHouse and will also receive compensatory interest of 8%. This totals around £4.7m for 270,000 agreements entered into after April 1, 2010, affecting 181,000 customers.

BrightHouse will write to all affected customers to explain the refund or balance adjustment that they will receive.

The FCA added that BrightHouse has worked to improve its lending application assessment to ensure that loans are affordable and customers are treated fairly during the collections process, including revising its late payment fee structure.

Jonathan Davidson, executive director of supervision at the FCA, said: “During the time in question, BrightHouse was not a responsible lender and failed to meet our expectations of firms in this sector.

“I am pleased that it has agreed to provide redress to those customers affected by these historic practices.

“This scheme continues our work with the rent-to-own sector to resolve the concerns we have previously identified.

“Responsible lending and the fair treatment of consumers, especially those in financial difficulties or who are vulnerable, are key priorities for us.”

Citizens Advice has welcomed the decision, saying its own research has found that one in five of rent-to-own customers spent 20% or more of their income on payments. More than half had to take on other debt to pay their credit off. 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 is 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.”