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| Rent-to-own customers face rip-off interest rates of 94%, say MPs | Rent-to-own customers face rip-off interest rates of 94%, say MPs |
| (34 minutes later) | |
| Hundreds of thousands of customers who buy household goods though rent-to-own schemes are being "ripped off", a group of MPs has concluded. | Hundreds of thousands of customers who buy household goods though rent-to-own schemes are being "ripped off", a group of MPs has concluded. |
| It said some of the poorest people in the UK are being charged interest rates of up to 94% a year to buy TVs or washing machines. | It said some of the poorest people in the UK are being charged interest rates of up to 94% a year to buy TVs or washing machines. |
| The All Party Parliamentary Group on Debt and Personal Finance now wants the regulator to take action. | The All Party Parliamentary Group on Debt and Personal Finance now wants the regulator to take action. |
| BrightHouse, the largest company, said it was disappointed by the report. | BrightHouse, the largest company, said it was disappointed by the report. |
| Under the rent-to-own model, consumers take out an agreement to buy a product, and then pay weekly instalments until they own it - similar to a hire purchase agreement. | Under the rent-to-own model, consumers take out an agreement to buy a product, and then pay weekly instalments until they own it - similar to a hire purchase agreement. |
| But usually customers have to take out compulsory insurance and warrantees, which can double the eventual cost. | But usually customers have to take out compulsory insurance and warrantees, which can double the eventual cost. |
| The MPs said that such insurance may have been mis-sold - especially where people already had household cover. | The MPs said that such insurance may have been mis-sold - especially where people already had household cover. |
| 'Peace of mind' | 'Peace of mind' |
| In one case a Samsung freezer cost £644 to buy in John Lewis - but, under a five year plan from BrightHouse, the same freezer cost £1,716. | In one case a Samsung freezer cost £644 to buy in John Lewis - but, under a five year plan from BrightHouse, the same freezer cost £1,716. |
| That is more than triple the John Lewis price. | |
| "Rent-to-own stores like BrightHouse charge inflated prices to some of the poorest people in the country," said Yvonne Forvargue, the chair of the parliamentary group. | "Rent-to-own stores like BrightHouse charge inflated prices to some of the poorest people in the country," said Yvonne Forvargue, the chair of the parliamentary group. |
| "Customers are often obliged to take out additional warranties and insurance, as a result paying several times the true value of the goods," she said. | "Customers are often obliged to take out additional warranties and insurance, as a result paying several times the true value of the goods," she said. |
| BrightHouse is the biggest chain in the UK, with 291 stores, mostly based in deprived areas. | BrightHouse is the biggest chain in the UK, with 291 stores, mostly based in deprived areas. |
| PerfectHome has 67 shops, and Buy as You View has an online operation. | PerfectHome has 67 shops, and Buy as You View has an online operation. |
| BrightHouse said it provided high quality products at competitive prices, and was proud to serve its customer base of lower income families. | BrightHouse said it provided high quality products at competitive prices, and was proud to serve its customer base of lower income families. |
| "Our customers carefully manage their limited resources and appreciate the peace of mind they get from BrightHouse," said Leo McKee, its chief executive. | "Our customers carefully manage their limited resources and appreciate the peace of mind they get from BrightHouse," said Leo McKee, its chief executive. |
| "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," he said. | "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," he said. |
| Assessments | Assessments |
| The Financial Conduct Authority (FCA) took over regulation of the sector in April 2014. | The Financial Conduct Authority (FCA) took over regulation of the sector in April 2014. |
| The MPs want it to investigate the high charges and the possible mis-selling of insurance policies. | The MPs want it to investigate the high charges and the possible mis-selling of insurance policies. |
| They would like to see health warnings attached to sales agreements. | They would like to see health warnings attached to sales agreements. |
| "The FCA needs to act now to stop rent-to-own customers from being ripped off," said Ms Forvargue. | "The FCA needs to act now to stop rent-to-own customers from being ripped off," said Ms Forvargue. |
| The FCA said it would respond to the report in due course. | The FCA said it would respond to the report in due course. |
| In the meantime, all businesses in the sector will have to be assessed by the FCA, starting in the summer of 2015. | In the meantime, all businesses in the sector will have to be assessed by the FCA, starting in the summer of 2015. |
| The regulator will look at a number of issues, including how they treat their customers, before deciding whether to authorise them. | The regulator will look at a number of issues, including how they treat their customers, before deciding whether to authorise them. |