Friday, September 24, 2021

Rent-to-own cap to limit product and credit costs

The City watchdog says a planned cap on rent-to-own charges will place limits on the cost of the product and..

By admin , in England , at November 22, 2018

The City watchdog says a planned cap on rent-to-own charges will place limits on the cost of the product and accompanying credit.

The Financial Conduct Authority (FCA) said the crackdown, first reported by Sky News on Wednesday evening and similar in nature to that imposed on the payday lending sector, would be applied from April.

Its proposals, if enacted following a consultation, would collectively save consumers – many of them the most financially vulnerable in the UK – almost £23m annually, the regulator said.

The rules would mean credit charges not exceeding the cost of the product.

Image: The cap will cover the amounts that can be charged for household appliances bought on credit

To help ensure prices are fair, rent-to-own providers must benchmark the cost of items against the prices charged by three other retailers.

The FCA said it had identified "very high prices" in the sector – with add-on insurance and warranties in some cases meaning customers paying up to four times the average retail price for items such as TVs, washing machines and cookers.

Its report found only a third of rent-to-own customers are in work, most are on low incomes of between £12,000 and
£18,000 and were likely to have missed a bill payment in the last six months.

FCA chief executive Andrew Bailey said the need for a cap was evident.

He said: "We want to stop consumers having to pay many multiples more than the price of a product on the high street.

"These changes build on the measures we have already taken across the high-cost credit sector."

More from Business

The regulator said that in addition to the cap and its accompanying rules it would also introduce a two-day cooling off period for the sale of extended warranties.

This will effectively ban firms from selling these warranties at the point of purchase from 22 February.

Original Article


Sky News



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