The FCA have proposed a price cap on the rent-to-own (RTO) sector in order to protect financially vulnerable consumers. The city regulator has said it could save 400, 000 consumers up to £22.7m a year.
The proposals include:
- restricting credit charges so they cannot be more than the cost of the product;
- requiring firms to benchmark the cost of products against the prices charged by 3 other retailers.
If the proposals are agreed, the rules will come into force in April 2019.
Andrew Bailey, CEO of the FCA said:
‘Today’s measures are designed to bring down very high prices in the rent-to-own sector, which is used by some of the most financially vulnerable in our society. A cap will prevent firms charging over the odds for essential everyday items like cookers or washing machines. We believe a cap is the only intervention that will effectively tackle the highest prices. If implemented it will save consumers up to £22.7m a year from excessive charges.
‘We want to stop consumers having to pay many multiples more than the price of a product on the high street. These changes build on the measures we have already taken across the high-cost credit sector.’
Read more here.