BrightHouse to pay customers nearly £15m in redress
BrightHouse will pay £14.8m in redress to nearly 250,000 customers after the FCA found that it was “not a responsible lender”.
The redress is in respect of 384,000 agreements for lending which may not have been affordable for customers and for payments for goods which should have been refunded.
The rent-to-own firm has been working with the Financial Conduct Authority (FCA) since late 2014. The regulator identified its affordability assessments and collections processes didn’t 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 undertook an extensive programme of work to improve its lending application assessments to ensure loans are affordable and customers are treated fairly throughout the collections process, including revising its late payment fee structure.
BrightHouse identified that some of its customers 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.
The first is for customers whose affordability had not been assessed properly at the outset of the loan. Those customers who handed back the goods will be paid back the interest and fees charged under the agreement, plus compensatory interest of eight percent. Customers who retained the goods will have their balances written off.
This redress totals around £10.1m for 114,000 agreements entered into between April 1 2014 and September 30 2016, covering 81,000 customers.
The second set of circumstances is for customers who made their first payment due under an agreement which was cancelled prior to the delivery of the goods. This first payment was not refunded to all customers.
BrightHouse will refund this first payment and pay compensatory interest of eight percent. This redress totals around £4.7m for 270,000 agreements entered into after April 1 2010, covering 181,000 customers.
The rent-to-own company apologised for what has happened and said it will send all customers affected a personal letter before the end of the year.
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.”