The Financial Conduct Authority (FCA) has announced it will introduce a price cap on the rent-to-own sector in a bid to protect the country’s most financially vulnerable.
The rent-to-own sector can see customers charged more than four times the value of products like electronics and white goods.
The FCA has stepped into introduce a price cap that will ensure that the charge for credit does not exceed the cost of the product on April 1 next year to halt this practice. Firms will have to benchmark the price against three other retailers under the proposed plans, which are expected to save consumers £22.7m per year.
You can read more on the progress we and others have made in today’s publication: https://t.co/u7TlPj78N7pic.twitter.com/o0mHxDOWxN
— Financial Conduct Authority (@TheFCA) November 22, 2018
Rent-to-own firms like BrightHouse have come under fire from the watchdog before – it was ordered to repay £14.8 million to 249,000 customers last year after breaching FCA rules on lending affordability and collecting.
The firms have long since marketed to society’s poorest with only a third of rent-to-own customers currently in work with most on low incomes between £12,000 and £18,000.