The FCA has announced that BrightHouse, a rent-to-own firm, has committed to pay over £14.8 million to 249,000 customers in respect of 384,000 agreements for lending which may not have been affordable and payments which should have been refunded.

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 the FCA 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.

BrightHouse has also 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; and
  • 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 and will 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 to explain the refund or balance adjustment that they will receive. The FCA states that customers do not need to take any action until they are contacted by Brighthouse.

View Rent-to-own firm providing redress for unfair treatment of customers, 24 October 2017