Rent-to-own stores 'ripping off clients'

MPs have called for an end to the expensive tactics used by the rent-to-own sector.

Such companies allow customers who can't afford to buy an item outright to pay it off in monthly installments. But they are charged such extortionate rates of interest the total bill can work out many times more expensive.

Some customers end up paying as much as £780 for a tumble dryer that can be bought outright from Curry's for £229.

BrightHouse is the largest retailer of its kind, with 291 UK stores and over 270,000 customers. Similar retailers include PerfectHome and Buy As You View.

These rent-to-own firms specialise in supplying popular products such as furniture, basic household goods and electronics, such as TVs, to low-income households.

High charges

As a result of concerns over costs being charged, the All-Party Parliamentary Group on Debt and Personal Finance (APPG) has published a report on this sector.

The inquiry found that as many as one in five BrightHouse customers fall more than a month behind with their payments and 22% of those in arrears have their goods repossessed.

One of the watchdog's main issues with these policies is the expensive compulsory warranties and insurance policies that are ripping customers off. The evidence collected found APRs of nearly 95%, as well as charges for bolt-on cover that is capable of doubling the cost of household goods.

The APPG report states that the FCA should carry out reviews into the potential miss-selling of insurances that accompany the rent-to-own schemes and they have also suggested that there should be 'health warnings' included in the process that will warn customers of the total cost they may be facing.

Labour MP and Chair of the APPG, Yvonne Fovargue said: "Customers are often obliged to take out additional warranties and insurance, as a result paying several times the true value of the goods. Many customers simply can't keep up and the goods are taken back to be sold again."

In response to the report's findings, BrightHouse's chief executive, Leo McKee said: "The service we provide gives them access to high-quality products for their homes at competitive prices. Our customers carefully manage their limited resources and appreciate the peace of mind they get from BrightHouse."

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