Martin Lewis: it’s rightfully about time FCA cracks down on ‘unjust’ rent-to-own sector with price cap
The Financial Conduct Authority (FCA) has confirmed it will cap prices for rent-to-own firms from 1 April 2019, meaning consumers won’t be charged more in interest than they paid for the product.
Martin Lewis, founder of MoneySavingExpert.com said: “The rent-to-own sector is perhaps the most visceral example of the poverty premium in the UK. The fact that the most vulnerable with the least, pay four times as much for their electrical and white goods as everyone else is simply unjust, and it’s rightfully about time that the FCA cracks down on it.
“There has been a real inconsistency across the board that payday loans – one form of high-cost lending – have had a total cost cap on them so that you cannot pay more than double what you originally borrowed, but with many other forms of high-cost credit, firms are free to charge what they like.
“With rent-to-own, it must be remembered the scale of the rip-off. Not only are you sometimes charged nearly double for the product, they then lend it at up to 100% APR, which means the costs aren’t gradually exploding out of control, they’ve been out of control from the start.”