Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, if he will make an assessment of the potential merits of bringing forward legislative proposals to introduce a cap on the total repayable cost to the consumer of rent-to-own goods.

The Government transferred the regulation of consumer credit, including rent-to-own, to the Financial Conduct Authority (FCA) in 2014 and has given the FCA strong powers to protect consumers. This was demonstrated by the FCA announcement in October 2017 that BrightHouse, a rent-to-own firm, would pay over £14.8 million in redress to 249,000 customers in respect of agreements which may not have been affordable, and payments which should have been refunded.

The Government has also given the FCA the power to cap all forms of credit, and the FCA can do so if it thinks it is necessary to protect consumers.

The FCA’s review of the high-cost credit sector has identified concerns about the high costs of rent-to-own borrowing for what is a particularly vulnerable consumer group, and the consequences of that borrowing. The Government welcomes the FCA’s ongoing work to review the high-cost credit market, including the rent-to-own sector. The FCA aims to consult on proposed remedies in spring 2018.

The FCA has consulted on proposed rules and guidance on staff incentives, remuneration and performance management in consumer credit firms, and published final rules on 27 March 2018. The rules will require firms to identify and manage risks arising from remuneration and performance management practices, and will come into force on 1 October.