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| BrightHouse: Rent-to-own giant collapses as coronavirus shuts shops | BrightHouse: Rent-to-own giant collapses as coronavirus shuts shops |
| (32 minutes later) | |
| BrightHouse - the biggest rent-to-own operator in the UK - has collapsed, with administrators now attempting to salvage parts of the business. | BrightHouse - the biggest rent-to-own operator in the UK - has collapsed, with administrators now attempting to salvage parts of the business. |
| Customers should continue to make the monthly payments required to keep their household goods, with administrators now acting as the collecting agent. | Customers should continue to make the monthly payments required to keep their household goods, with administrators now acting as the collecting agent. |
| The company had been struggling after an influx of compensation claims for selling to people who could not repay. | The company had been struggling after an influx of compensation claims for selling to people who could not repay. |
| Its shops were then shut owing to coronavirus restrictions on retailers. | Its shops were then shut owing to coronavirus restrictions on retailers. |
| Julie Palmer, from corporate recovery business Begbies Traynor, said: "Coronavirus was the final nail in the coffin for BrightHouse." | Julie Palmer, from corporate recovery business Begbies Traynor, said: "Coronavirus was the final nail in the coffin for BrightHouse." |
| BrightHouse has 240 shops and 2,400 employees, whose jobs are now at serious risk. | |
| The firm's collapse came minutes before Italian restaurant chain Carluccio's also fell into administration. | |
| Collectively, the two firms employ 4,500 people. | |
| BrightHouse's 200,000 rent-to-own customers make monthly payments for household appliances, in effect renting goods (and paying interest) until they have paid in full. | |
| Many are on low incomes and find it difficult to access credit from mainstream lenders to pay for fridges, TVs, washing machines and other electrical items. Only about a third are in work. | Many are on low incomes and find it difficult to access credit from mainstream lenders to pay for fridges, TVs, washing machines and other electrical items. Only about a third are in work. |
| Failing to make repayments, even now the company is in administration, could lead to extra charges and harm a credit score. Some may find that insurance policies sold alongside these rental agreements may no longer continue as the company has ceased trading, although more details are expected on this. | |
| What happens next? | What happens next? |
| The collapse, which was trailed on Friday, means that the administrators - Grant Thornton - will now try to find buyers for all, or some, of the business. | |
| The company's website was still operating on Monday morning. | The company's website was still operating on Monday morning. |
| Alongside many other lenders of high-cost credit, the company was being challenged by people who said they were given credit when they should not have been. | Alongside many other lenders of high-cost credit, the company was being challenged by people who said they were given credit when they should not have been. |
| In October 2017, the company was fined nearly £15m by the City regulator, the Financial Conduct Authority (FCA), for not acting as a "responsible lender". | In October 2017, the company was fined nearly £15m by the City regulator, the Financial Conduct Authority (FCA), for not acting as a "responsible lender". |
| Some of those customers were given rental agreements, despite being unable to realistically afford to make the repayments. | Some of those customers were given rental agreements, despite being unable to realistically afford to make the repayments. |
| In January, the business said it was under pressure from dealing with additional mis-selling claims | In January, the business said it was under pressure from dealing with additional mis-selling claims |
| Debt adviser Sara Williams, who writes the Debt Camel blog, said: "Customers need to think if they can manage to make the repayments. | Debt adviser Sara Williams, who writes the Debt Camel blog, said: "Customers need to think if they can manage to make the repayments. |
| "If their income has fallen because of coronavirus, they should ask for a payment break. And if the item is just too expensive, they should ask for a lower payment arrangement. They may be able to make an affordability complaint and get a refund of the interest they have paid on previous items." | "If their income has fallen because of coronavirus, they should ask for a payment break. And if the item is just too expensive, they should ask for a lower payment arrangement. They may be able to make an affordability complaint and get a refund of the interest they have paid on previous items." |
| However, anyone eligible for compensation may now find they have to wait longer, and receive a fraction of what they might have expected. | However, anyone eligible for compensation may now find they have to wait longer, and receive a fraction of what they might have expected. |
| Rules, introduced last year, restricted the cost of rent-to-own, following claims of spiralling debts. | Rules, introduced last year, restricted the cost of rent-to-own, following claims of spiralling debts. |
| The FCA ruled that interest charged would be capped to as much as the cost of the product. | The FCA ruled that interest charged would be capped to as much as the cost of the product. |
| Prices were also controlled, with shops only able to charge no more than the median - the middle price - of three mainstream retailers, including delivery and installation charges. | Prices were also controlled, with shops only able to charge no more than the median - the middle price - of three mainstream retailers, including delivery and installation charges. |
| Shops were also prevented from increasing their prices for insurance premiums, extended warranties, or arrears charges, to recoup lost revenue from the price cap. | Shops were also prevented from increasing their prices for insurance premiums, extended warranties, or arrears charges, to recoup lost revenue from the price cap. |
| Before the rules were brought in, spiralling interest charges meant some rent-to-own consumers had ended up paying more than four times the retail price they would have paid in normal shops. | Before the rules were brought in, spiralling interest charges meant some rent-to-own consumers had ended up paying more than four times the retail price they would have paid in normal shops. |
| Among those who were unhappy with how the business operated was Terri Carter, a paralegal from Great Yarmouth. | Among those who were unhappy with how the business operated was Terri Carter, a paralegal from Great Yarmouth. |
| She had ordered a TV through BrightHouse after running out of money when furnishing her new home. She went into the store to explain that she needed to miss a repayment, only later to find a woman in a suit, accompanied by two "big blokes", banging on her door. | She had ordered a TV through BrightHouse after running out of money when furnishing her new home. She went into the store to explain that she needed to miss a repayment, only later to find a woman in a suit, accompanied by two "big blokes", banging on her door. |
| At home with her son, they threatened to take away her TV, and she felt forced to agree to making extra payments. | At home with her son, they threatened to take away her TV, and she felt forced to agree to making extra payments. |
| "I work in law so I knew my rights, but what if that happens to someone older, or someone who has just had a baby?" she said. | "I work in law so I knew my rights, but what if that happens to someone older, or someone who has just had a baby?" she said. |
| Angela Clements, founder or not-for-profit buy-now-pay-later operator Fair for You, said: "While my heart goes out to BrightHouse's staff who will lose their jobs, I hope that its collapse will make other lenders think twice before trying to make easy money out of hard-working families in this way. | Angela Clements, founder or not-for-profit buy-now-pay-later operator Fair for You, said: "While my heart goes out to BrightHouse's staff who will lose their jobs, I hope that its collapse will make other lenders think twice before trying to make easy money out of hard-working families in this way. |
| "There is a clear need to support and rapidly scale the affordable lending sector so that other high cost credit doesn't keep mutating in that gap." | "There is a clear need to support and rapidly scale the affordable lending sector so that other high cost credit doesn't keep mutating in that gap." |