BrightHouse agrees £14.8m redress scheme with FCA

"During the time in question, BrightHouse was not a responsible lender and failed to meet our expectations of firms in this sector."

BrightHouse first came under fire in late 2014 after the FCA identified that its lending application affordability assessment processes and collections processes "did not always deliver good outcomes for customers", particularly those who were at a higher risk of falling into financial difficulty.

The FCA says BrightHouse has since undertaken an extensive programme of work to improve its lending application assessment to ensure that loans are affordable and customers are treated fairly throughout the collections process, including revising its late payment fee structure.

BrightHouse has agreed to provide redress to customers whose circumstances had not been assessed properly 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. This redress totals around £10.1 million for 114,000 agreements entered into between 1 April 2014 and 30 September 2016, covering 81,000 customers.

The firm has also proposed redress for customers who made the first payment due under an agreement with the firm 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%. This redress totals around £4.7 million for 270,000 agreements entered into after 1 April 2010 covering 181,000 customers.

BrightHouse will write to all affected customers, some of whom are affected by both sets of circumstances, to explain the refund or balance adjustment that they will receive.

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.

“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.”