Rent-to-own company BrightHouse is to pay £14.8 million to almost 250,000 customers after an investigation by the regulator found it had failed to be a "responsible lender".
The Financial Conduct Authority (FCA) today announced the redress scheme after finding that the ways in which the firm assessed some customers' ability to repay and collected payments may have been unfair, particularly to those at higher risk of financial difficulty.
The investigation into BrightHouse – which provides household goods to customers who enter into a credit agreement to pay for them on a weekly or monthly basis – began in late 2014. But some of the refunds date back to sales from 2010.
Am I owed money?
BrightHouse has agreed to pay two sets of customers:
- 81,000 who weren't assessed properly will receive £147 each on average. This relates to agreements made between 1 April 2014 and 30 September 2016, with BrightHouse admitting it may not have properly checked if some customers could afford repayments.
If you returned the goods you'll be paid back the interest and fees charged under the agreement, plus interest of 8%. If you kept the goods, your balance will be written off. This redress totals about £10.1 million for 114,000 agreements.
- 181,000 who paid for goods they didn't receive or keep will receive £27 on average. Some customers made the first payment for a goods order, which was cancelled within the 14-day cooling-off period or before delivery, but never got a refund. BrightHouse will refund this first payment plus interest of 8%. This redress totals around £4.7 million for 270,000 agreements made after 1 April 2010.
Some customers will be owed cash under both sets of circumstances.
How do I get my money?
BrightHouse will write to 213,000 customers by the end of this year, outlining the refund they will receive or transferring ownership of the goods to them. The remaining 36,000 customers will have the money knocked off their existing BrightHouse balances.
The FCA says customers don't need to do anything until they are contacted by BrightHouse.
BrightHouse has said it will pay the redress by cheque. If you have problems cashing it, you can ask for a bank transfer or to collect your money from a PayPoint location instead. To arrange this call 0800 304080 – you'll need your cheque and letter with you when you call.
For more info see the BrightHouse repayments page.
'BrightHouse was not a responsible lender'
The FCA's Jonathan Davidson 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."
The FCA said BrightHouse has undertaken an "extensive programme" to improve its lending application assessment to ensure that loans are affordable and customers are treated fairly, including revising its late payment fee structure.
What does BrightHouse say?
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 FCA recognised this when they confirmed in April that they are minded to authorise our business, subject to specific conditions."