BrightHouse is facing a compensation bill of almost £15m after the City watchdog found it did not act as a “responsible lender” to 249,000 customers.
The firm, which describes itself online as “leading by lending responsibly”, provides household goods such as TVs and furniture to customers on hire purchase agreements.
But the Financial Conduct Authority (FCA) said 384,000 customer lending agreements were found that “may not have been affordable” and payments “which should have been refunded” between 2010 and 2016.
The regulator hit out at the firm’s lending application affordability assessment and collections processes, saying they “did not always deliver good outcomes for customers, particularly those who were at a higher risk of falling into financial difficulty”.
As a result of the failures, the FCA said 81,000 customers, covering 114,000 transactions, who were not properly assessed and had since handed back the goods would be repaid the interest and fees they were charged.
It said those people would also get 8% in compensatory interest.
Those people who retained the products they initially rented would have their balances written off, the watchdog said.
It added that BrightHouse had agreed refunds and compensatory interest of 8% to 181,000 customers who had made the first payment due under an agreement with the firm which was cancelled prior to delivery of the goods.
The FCA said the company was writing to all affected customers and had undertaken “an extensive programme of work” to improve its processes.
BrightHouse chief executive Hamish Paton said: “We sincerely apologise to those customers who were affected.
“Our top priority is to ensure that they are reimbursed as soon as possible.
“We’re absolutely determined that this doesn’t happen again and have made significant improvements over the last 18 months. The FCA recognised this when they confirmed in April that they are minded to authorise our business, subject to specific conditions.”
Source: SKY News Feed