BrightHouse (a trading name of Caversham Finance Limited) is a rent-to-own firm which provides household goods to customers on hire purchase agreements. BrightHouse has been working closely with the FCA since late 2014 as we identified that the firm’s lending application affordability assessment processes and collections processes did not always deliver good outcomes for customers particularly those who were at a higher risk of falling into financial difficulty.
In response to these concerns BrightHouse has undertaken an extensive programme of work to improve its lending application assessment to ensure that loans are affordable and customers are treated fairly throughout the collections process, including revising its late payment fee structure.
In addition, BrightHouse has identified customers that may have been treated unfairly where its processes fell short of FCA expectations and has committed to putting things right for these customers.
The firm has proposed redress for customers in two sets of circumstances:
- customers whose circumstances have not been assessed properly at the outset of the loan to determine whether they could afford it and may have had difficulty making payments. Customers who handed back the goods will be paid back the interest and fees charged under the agreement, plus compensatory interest of 8%. Customers who retained the goods will have their balances written off. This redress totals around £10.1 million for 114,000 agreements entered into between 1 April 2014 and 30 September 2016, covering 81,000 customers.
- customers who made the first payment due under an agreement with the firm which was cancelled prior to the delivery of the goods. This first payment was not returned to all customers. BrightHouse will refund this first payment plus pay compensatory interest of 8%. This redress totals around £4.7 million for 270,000 agreements entered into after 1 April 2010 covering 181,000 customers.
BrightHouse will write to all affected customers, some of whom are affected by both sets of circumstances, to explain the refund or balance adjustment that they will receive. Customers do not need to take any action until they are contacted by BrightHouse.
Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations 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.”
Notes to editors
- Customers can contact BrightHouse for further information via its website
- FCA webpage on rent to own
- Webpage to the FCA High Cost Credit Review
- RTO retailers sell household items, such as washing machines and televisions, in-store and on-line. Consumers pay on a weekly or monthly basis and can choose to have ownership of the goods transferred to them when all the payments have been made.
- More information on the BAYV redress scheme
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.