FCA announces redress scheme for rent-to-own firm PerfectHome

PerfectHome (a trading name of Temple Finance Limited) is a rent-to-own firm which provides household goods to customers on hire purchase agreements.

Responsibility for regulating the rent-to-own sector transferred from the Office of Fair Trading to the FCA in April 2014. Following this we identified that 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.

In addition 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, customers paying for insurance before receiving goods and customers not always receiving a refund of their first payment where the agreement was cancelled before goods were delivered.

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 redress to these customers.

The scheme proposes redress for customers in four sets of circumstances:

• £1.7 million 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.

The remaining redress relates to:

• incorrectly charged late fees;
• insurance payments made prior to the delivery of goods; and
• initial payments made against sales that were subsequently cancelled.

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.

Around 2,425 customers whose loans were unaffordable, which led to them defaulting, will have their debts written off by the firm.  They will also become the owners of the goods they originally got the loan for.

Notes to editors

1. High-cost credit review update[1].
2. The FCA authorised PerfectHome to carry out, amongst others, hire purchase agreements on the 14 December 2017.
3. RTO retailers sell household items, such as washing machines and televisions, in-store and on-line. Consumers pay on a weekly or monthly basis and can choose to have ownership of the goods transferred to them when all the payments have been made.
4. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
6. Find out more information about the FCA.