Rent-to-own firm agrees to pay £2m in redress

The redress package, which will be made up of cash payments and balance write-offs for 37,000 customers, has been ordered by the Financial Conduct Authority (FCA).

The industry watchdog identified issues with the firm following its take over of regulation of the rent-to-own sector from the Office of fair Trading in 2014.

The FCA said the firm’s affordability assessments did not adequately take into account customer circumstances which led to customers being issued with loans they could not afford.

It also said PerfectHome’s collections processes did not always deliver good outcomes for customers with some customers being charged late fees for arrears on their insurance contracts, contrary to the firm’s own policy.

In response to these concerns PerfectHome has conducted a major programme of improvements to ensure that loans are affordable and customers are treated fairly throughout the collections process.

PerfectHome has identified customers that may have been treated unfairly in the past and has committed to pay them redress. The scheme proposes redress for customers in four sets of circumstances:

•£1.7m relates to 4,000 customers where it was found that affordability assessments were not completed satisfactorily. This meant, in some cases, customer circumstances were not sufficiently considered and loans were issued that may not have been affordable for customers;

•Consumers incorrectly charged late fees;

•Insurance payments made by consumers prior to the delivery of goods;

•Initial payments made by consumers against sales that were subsequently cancelled.

Of the customers whose loans were found to be unaffordable, which led to them defaulting, the FCA said they will have their debts written off by the firm. This group, of 2,425 consumers, will also become the owners of the goods they originally got the loan for.

Jonathan Davidson, executive director of supervision, retail and authorisations at the FCA, said: “Our key priority is to ensure all financial firms lend responsibly and treat consumers fairly; especially those in financial difficulties or who are vulnerable.

“Unaffordable lending is not acceptable in any circumstances. I am pleased that the firm has taken steps to address this and provide redress to those customers affected.

“PerfectHome have recently been authorised by the FCA following substantial improvements to its business practices.

“This package of redress continues the FCA’s work with the rent-to-own sector to resolve the concerns we have previously identified.”

PerfectHome will contact all affected customers to explain the refund or balance adjustment they will receive. Customers do not need to take any action until they are contacted.