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A price cap to help consumers who use "rent-to-own" firms to buy goods is a possibility, the head of the City regulator has said.

 

Andrew Bailey, the chief executive of the Financial Conduct Authority (FCA), said a cap would be considered as part of its inquiry into high-cost credit.

 

Up to 400,000 people use rent-to-own firms to buy household appliances, paying the money back over three years.

 

After interest, they can end up paying three times the original price.

 

It follows a call for a cap from Citizens Advice, which said restrictions imposed on payday lenders two years ago had been a success.

http://www.bbc.co.uk/news/business-38132843

 

 

FCA review “opportunity” to protect more high cost credit customers

 

Rent to own services, logbook loans and guarantor loans should be included in the FCA’s payday loan cap - and new rules introduced to provide added protections for customers including full checks to make sure people can afford to pay back what they have borrowed says Citizens Advice.

 

The Financial Conduct Authority has today launched a call for evidence on how the wider high cost credit market is working - including rent to own, guarantor and logbook loans - to find out how firms are treating their customers. It follows the regulator’s action to clean up the payday loan market, which included a cap on interest rates and fees introduced in January 2015.

 

The national charity had published a new report today finding rent to own customers are getting trapped in debt due to problems such as high interest rates and additional fees, inadequate affordability checks and inflexible debt collection practices.

 

Since the introduction of the cap on payday loan interest and fees in January 2015, Citizens Advice has helped people with 45% fewer payday loan problems.

https://www.citizensadvice.org.uk/about-us/how-citizens-advice-works/media/press-releases/fca-review-opportunity-to-protect-more-high-cost-credit-customers/

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