BrightHouse, a hire purchase provider of household goods, has agreed a customer redress worth £14.8m following talks with the Financial Conduct Authority (FCA).
The FCA found that the firm’s affordability assessment process for lending “did not always deliver good outcomes for customers, particularly those who were at a higher risk of falling into financial difficulty.”
As a result, Brighthouse will compensate 249,000 customers in respect of 348,000 agreements that might have not been affordable to them.
Jonathan Davidson, executive director of supervision for 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.”
Customers who handed back the goods will be paid back interest and fees incurred over the duration of the agreement, plus a compensatory interest of 8%. Those who instead retained the goods will have their balances written off.
Together, these first two groups total 81,000 customers, and include 114,000 agreements underwritten in the 18 months to April 2014. They will constitute the bulk of the redress with £10.1m.
Additionally, customers who paid a deposit, but whose agreement was cancelled before the delivery of goods, will have the deposit refunded plus the same compensatory interest of 8%. These customers total 181,000 across 270,000 agreements.
The FCA’s engagement with BrightHouse had been going on since 2014, and had been first acknowledged by the Authority in July 2016.