LONDON (Reuters) - Britain’s PerfectHome, a household goods rent-to-own company, will write off the debts of almost 2,500 customers as part of a 2.1 million pound redress package, the Financial Conduct Authority (FCA) said on Tuesday.
The markets watchdog said a total of 37,000 customers would either receive cash payments or have their debts cancelled after PerfectHome issued loans to customers they could not afford and levied unfair charges.
The company has since improved practices to ensure loans are affordable and customers treated fairly, the FCA added.
PerfectHome, a trading name of Temple Finance Ltd, is the third rent-to-own business to compensate customers since the FCA started regulating the sector in 2014. BrightHouse, the market leader, was told to pay 14.8 million pounds last year.
PerfectHome’s Chief Executive Mike Sweetland, who said his firm had only been authorised by the FCA since last December, apologised and said the mistakes of the past could not happen again after a meticulous review of practices.
“We wish to say sorry to our customers and we’re putting that right,” he said. “Those affected will be receiving letters from me personally with information about their redress payments which will be made by cheque or balance adjustments.”
Around 1.7 million pounds of the PerfectHome package is designated for 4,000 customers over loans, the FCA said. The rest will make amends for incorrectly charged late fees, insurance payments made before goods were delivered and initial payments made against sales that were subsequently cancelled.
About 2,425 customers where given unaffordable loans and defaulted, the FCA said. They will have their debts written off by the firm and also become the owners of the goods they originally got the loan for.
The independent Citizens Advice information group urged the FCA to use an upcoming review of the high-cost credit market to extend protections to rent-to-own customers.
The FCA said in January that new rules could soon be brought in to protect consumers from high-cost credit companies such as doorstep lenders and household appliance rental firms, which typically charge more for goods such as fridges, televisions and other items by taking payments over time.
An FCA spokeswoman said a review of the sector could be concluded in May.
Reporting by Kirstin Ridley; Editing by Alexander Smith/David Evans