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Rent to own

The FCA considering capping rent-to-own charges

Things are going to change for rent-to-own companies such as Brighthouse, Perfect Home and Buy as You View etc, as they now face a price cap.

The Financial Conduct Authority (FCA), which is Britain's financial watchdog, has spent nearly two years studying borrowing at high-interest rates.

A cap on rent-to-own prices is being considered, with a plan to introduce it in April 2019. The FCA also want to ban the sale of extended warranties, which are often tagged onto agreements at the point of sale.

Rather than buying items for your home outright, these rent-to-own companies ‘rent’ you items such as TVs, sofas and fridges where you get can often get the product straight away and then pay for it in instalments, plus interest, over one to three years.

Furnishing your home in this way can often be much more expensive than buying the product outright. The FCA has said that it has seen cases when people had paid more than £1,500 for essentials like an electric cooker that could be bought on the high street for less than £300.

What changes do the FCA want to make?

Andrew Bailey from the FCA said: "High-cost credit is used by over three million consumers in the UK, some of who are the most vulnerable in society.

"The proposals will benefit overdraft and high-cost credit users, re-balancing in the favour of the customer."

The FCA is looking at capping prices and plan to bring one in by April 2019. It's also looking to ban the sale of extended warranties at point of sale, which could save customers £7.7 million a year.

"The FCA believes the harm identified in this market is sufficient in principle to consider a cap on rent-to-own prices. It will now carry out the detailed assessment of the impact that a cap could have on the rent-to-own sector and how it might be structured."

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