- Shop allows customers to rent goods with interest of up to 99.9%
- City watchdog says it didn’t act as a ‘responsible lender’
- Brighthouse will compensate 249k customers a total of £14.8m
- Fallen into a debt trap using Brighthouse or somewhere similar? Get in touch: firstname.lastname@example.org
High street shop Brighthouse, which allows customers to rent goods with interest of up to 99.9 per cent, will pay £14.8million in compensation after the city watchdog concluded it didn’t act as a ‘responsible lender.’
The redress will go to 249,000 customers linked to lending agreements which ‘may not have been affordable’ and payments ‘which should have been refunded’ the Financial Conduct Authority said.
Brighthouse provides household goods to customers on hire purchase agreements over a set period of up to three years.
Compensation: The shop which charges interest up to 99.9% for goods has been probed by the FCA
Some examples include an Apple 13.3′ 128 GB MacBook Air, with a product price of £991.60 – but over two years, with 99.9 per cent interest, the total payable is an eye-watering £1,820.
A Hoover tumbledryer with a product price of £337.88 spread over three years with 69.9 per cent interest, along with installation, has a total payable price of £741.
Brighthouse has been working with the FCA since 2014 after the watchdog identified the firm’s lending assessment and collections processes fell short of its expectations.
Some vulnerable customers who use it can find themselves falling into a debt trap with high levels of interest charged.
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 says it has ‘identified customers that may have been treated unfairly where its processes fell short of FCA expectations’ and has committed to ‘putting things right.’
Where it is determined that customers were not assessed properly at the outset of the loan and may have had difficulty making payments, and providing they handed back the goods, Brighthouse will pay back the interest and fees charged under the agreement, plus compensatory interest of eight per cent.
Customers who retained the goods will have their balances written off.
This part of the redress totals around £10.1million 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 that was cancelled prior to the delivery of the goods will be refunded by Brighthouse plus receive compensatory interest of eight per cent.
This redress totals around £4.7million for 270,000 agreements entered into after 1 April 2010 covering 181,000 customers.
Brighthouse will write to all affected customers from next week, some of whom are affected by both sets of circumstances, to explain the refund or balance adjustment that they will receive.
Brighthouse says it is working with credit reference agencies to establish addresses, or likely addresses, of eligible customers if they have moved. It is also using texts and e-mails.
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.
A PREVIOUS WARNING
This is Money ran a story in 2012 warning people to think carefully before using Brighthouse.
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.’
Hamish Paton, chief executive of Brighthouse, 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.’
SOME OF THE GOODS ON OFFER
Brighthouse offer an array of goods including appliances, computers, mobile phones and furniture.
Here are some of the examples given on its website along with the interest:
Sony PS4 1TB Gran Tourismo Sport Bundle
Weekly payment: £9.00
Product Price: £559.79
Number of weeks: 130
Total payable with 99.9 per cent interest: £1,170.00
Apple 32GB iPhone 7 – Black
Weekly payment: £14.50
Product Price: £708.11
Number of weeks: 78
Total payable with 99.9 per cent interest: £1,131.00
Hannah Corner Sofa
Weekly payment: £17.00
Product Price: £1,274.51
Delivery and Installation: £60.00
Number of weeks: 156
Total payable with 69.9 per cent interest: £2,652.00
Courtesy: Daily Mail Online