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BrightHouse ordered to pay 15m compensation to 249,000 customers

Tuesday, 24th October 2017

Following a review by the financial regulator the Financial Conduct Authority (FCA), BrightHouse was found ‘not to be a responsible lender’ and subsequently ordered to compensate 249,000 customers covering 384,000 agreements.

The customers to be compensated

Under the guidance of the FCA the firm has proposed redress for customers in two sets of circumstances:

Agreements (114,000) entered into between 1 April 2014 and 30 September 2016

This is 81,000 customers with the redress of £10.1 million.

  • Who were not properly assessed at the outset of the loan to determine whether they could afford it and may have had difficulty making payments
  • Customers who handed back the goods will be paid back the interest and fees charged under the agreement, plus compensatory interest of 8%
  • Customers who retained the goods will have their balances written off.

For agreements (270,000) entered into after 1 April 2010

This 181,000 customers with the redress of 4.7 million.

Customers who cancelled the agreement after one payment which was cancelled prior to the delivery of the goods. This first payment was not returned to all customers. BrightHouse will refund this first payment plus pay compensatory interest of 8%.

How and what do you buy from BrightHouse?

You can rent to buy most household appliances such as televisions, fridges and washing machines either in-store or on-line via hire purchase agreements. You pay on a weekly or monthly basis and take ownership upon the last payment. Customers that purchase goods this way usually have poor credit ratings and are vulnerable to financial difficulty. The business model has attracted criticism in he past from commentators citing a £300 washing machine or television can end up costing nearer the £1,000 when accounting for all the administration and interest charges. 

I’m a customer of BrightHouse, do I need to do anything?

BrightHouse will write to all affected customers by the end of the year, some of whom will be affected by both sets of circumstances, the letter will explain the refund or balance adjustment that the customer is to receive. Customers do not need to take any action until they are contacted by BrightHouse.

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.

Responsible lending and the fair treatment of consumers, especially those in financial difficulties or who are vulnerable, are key priorities for us.”

You can read the full press release from the FCA here

 

 

 

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