Rent to own schemes “rip customers off”
11/02/2015
A group of MPs believe that people who buy products on a “rent to own” basis are being ripped off.
Customers will take out an agreement to buy a product, such as a television or a washing machine, and pay weekly or monthly instalments until they own it. These agreements frequently charge interest rates of up to 94%, and it is often the poorest parts of the country who are targeted. Also, customers may have to take out compulsory insurance or warranties, which can add up to double the cost on top of the original product and interest.
The All Parliamentary Group on Debt and Personal Finance has called for the Financial Conduct Authority (FCA) to take action to investigate the high charges and the possible mis-selling of insurance policies.
Yvonne Forvargue, the chair of the parliamentary group said:
"Rent-to-own stores like BrightHouse charge inflated prices to some of the poorest people in the country,
"Customers are often obliged to take out additional warranties and insurance, as a result paying several times the true value of the goods"
BrightHouse is the biggest chain to sell this kind of products in the UK, and has 291 stores, mostly based in deprived areas. PerfectHome has 67 shops, and Buy as You View has an online operation.
Chief executive of BrightHouse, Leo McKee, said:
"Our customers carefully manage their limited resources and appreciate the peace of mind they get from BrightHouse,
"We are already working closely with our new regulator, the FCA, and are constantly exploring ways to make our offer to customers even more transparent and competitive"
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