BrightHouse has agreed to pay out £14.8m to around 249,000 customers after the Financial Conduct Authority (FCA) found that it hadn’t been acting as a “responsible lender”.
The compensation claim has been linked to 348,000 customer lending agreements which the financial watchdog found may not have been affordable, as well as payments that should have been refunded.
BrightHouse was created to provide household goods to customers on hire purchase agreements. However, the company has been working with the FCA since 2014 after the watchdog realised that the firms lending assessment and their processes of collection were falling short of what was expected.
After investigation with the FCA, BrightHouse admitted that customers had been identified that had been treated unfairly by the firm, and committed themselves to “putting things right” for these customers.
For all customers involved, there will be a separate series of actions that BrightHouse intend to take in relation to paying them back, where customers who were initially assessed wrong at the outset of the loan and therefore had difficulty making the payments and then handed back the goods will be receiving payments equal to the interest and fees that had been charged by the agreement, as well as compensatory interest of 8%.
Any BrightHouse customers who kept the goods they received will have their balances written off, a move which is totalling around £10.1million for the 114,000 agreements that were entered into between April 1, 2014, and September 30, 2016 – this covers 81,000 customers.
The customers who made their first payment that was due under any agreements with the firm that were cancelled before the goods they ordered were delivered will all be refunded by BrightHouse as well as receiving an 8% compensatory interest. This decision is costing the firm about £4.7million for the 270,000 agreements that they entered into after 1 April 2010, which covers 181,000 customers.
As well as the repayments, BrightHouse has stated that they will write to all of the customers that were affected so that the refund or balance adjustment that they are receiving can be explained.