Rent-to-own firm BrightHouse has been ordered to pay £14.8 million to 249,000 customers after the financial regulator found it “was not a responsible lender”.
BrightHouse, which describes itself as the UK’s largest weekly payment retailer, sells household goods such as furniture, appliances and electronics.
On Tuesday the Financial Conduct Authority (FCA) said that customers in two sets of circumstances will be compensated.
Customers who between April 2010 and April 2017 may not have received a refund of their initial payments when an agreement was cancelled within the first 14 days will receive an average payment of £27.
The redress comes to about £4.7 million for 270,000 agreements covering 181,000 customers.
BrightHouse will also have to compensate customers whose circumstances were not properly assessed before receiving the loan.
This applies to customers who took out an agreement between April 2014 and September 2016.
BrightHouse said that customers will receive an average payment of £147. Alternatively, if the customer retained the product, then the ownership will be transferred to them.
The FCA said that this redress totals about £10.1 million for 114,000 agreements covering 81,000 customers.
The FCA said that the financial regulator has been working with BrightHouse since late 2014 to assess the firm’s lending application affordability assessment processes and collections processes.
The FCA determined BrightHouse “did not always deliver good outcomes for customers particularly those who were at a higher risk of falling into financial difficulty”.
Under BrightHouse’s pay weekly scheme, customers can expect to pay 69.9% APR.
Customers affected by the FCA’s announcement today will not have to contact BrightHouse.
Rather, the firm will write to 213,000 past and current customers to explain the refund and how much they are due.
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.”
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.”
Are you a BrightHouse customer affected by this? Contact firstname.lastname@example.org to share your story.