The rent-to-own price cap will be coming into force in April to offer more protection for those in poverty who are forced to turn to unscrupulous high-cost credit lenders.
The Financial Conduct Authority (FCA) has confirmed that the long-mooted cap will arrive in a couple of months, promising to save customers who have been ripped off by lending firms up to £22.7m a year.
The cap will ensure that lenders cannot charge more than 100 per cent of the value of a product – cracking down on firms such as BrightHouse which was ordered to pay £14.8m in compensation to 249,00 customers in 2017 after breaching FCA lending rules.
Today @TheFCA has confirmed its policy on the introduction of the new rent-to-own price cap rules, following consultation. Thanks to the new rules, a cap on the cost of rent-to-own credit will come into force in April. Read more: https://t.co/meC68v77z4#renttoown#highcostcreditpic.twitter.com/y5mX3t2Eeb
— StepChange (@StepChange) March 5, 2019
A consultation paper on a price cap, released in November, found that BrightHouse and other firms in the rent-to-own sector charge up to four times what a product is worth with skyrocketing repayments driving vulnerable customers into further poverty.
And that’s why the cap will introduce benchmark base prices compared across three mainstream retailers to stop consumers being exploited.