I used the story of a constituent to force the Financial Conduct Authority (FCA) to consider capping interest applied by rent-to-own companies like BrightHouse. Electricals retailer BrightHouse was last week fined £14.8 million by the FCA for irresponsible lending and treating customers unfairly.
In a Treasury Select Committee hearing yesterday, I grilled chief executive Andrew Bailey about what else FCA was doing to curb BrightHouse's "predatory" behaviour. I highlighted the case of a woman who paid more than £2,200 for a TV worth £600, and one of his own constituents who paid off 70% of the value of a product before having it taken away by a "very rude bloke" for one missed payment.
I asked Mr Bailey: "These people end up repaying three times, or more, what they should.
"And you yourself said in a speech that the cap on payday lending of two times maximum has been effective, and people haven't lost out.
"So why aren't you doing it with this sector?"
He responded: "That's what we are doing with high cost credit. We are looking at a number of sectors... Because I agree with you. The issue is real."
I continued: "Can I ask you to take away, as a message, there ought to be caps in this sector – just like payday lending. And will you take action?"
Mr Bailey responded: "Good point. That will be in the frame in terms of what we look at as a solution.
"Caps work better for some products than others but I want to be clear I'm not ruling it out."
I followed up by quoting the interest rates of a number of rent-to-own companies – BrightHouse (70%) PerfectHome (70%) and Buy As You View (69%), adding: "It's not a competition is it? It's a cartel."
We must do more to crack down on firms who prey on the poorest and most vulnerable in society.
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