A recent investigation for the BBC’s Victoria Derbyshire programme saw Labour leader Ed Miliband call for better and clearer regulation of the rent-to-own sector.
The former leader of the Labour party told the BBC:
“It seems to me that too often rent-to-own companies are taking advantage of people who feel they have nowhere else to go. The regulator needs to stop the most vulnerable people in our society, like those with learning difficulties, being taken advantage of”.
Certain high-street chains – such as BrightHouse, PerfectHome and Buy as you View– sell a range of household goods full of everyday and luxury household products, with plenty of easy-pay options. But as the Independent’s Simon Read once found:
“Want a 42-inch HD TV? It’s yours for just £9.50 a week at BrightHouse at the moment. If that sounds a tempting bargain, think again. Anyone taking up the TV offer, for instance, would have to pay £9.50 for three years. The total amount they would eventually hand over would be £1,482. Doesn’t sound too bad for a 42in telly? What if I tell you that Argos currently has a Hitachi 42in HD model for just £249 and that most retailers flog them at between £300 and £400? Would you think the person who paid £1,482 has been ripped off?”
A quick search over the internet finds that an EcoSmart Fridge Freezer from one of the high-street chain shops has a weekly cost of £8.50. At 69.9 per cent APR, over the course of 156 weeks, the total payable amount is £1,326.00. Another quick search on a deal comparison site finds that if you pay up front you can get the same fridge for £294.00.
Concerns over the Rent to Own sector have been growing for a number of years, particularly over the inflated prices for goods and harmful sales tactics that many feel are predatory. A couple of years ago a campaign in The Sun targeted Brighthouse, an example of one of the high-street Rent-to-Own stores. Journalists asked their representative what they felt about some of their goods being cheaper at Harrods, to which one representative replied that they didn’t mind really because they didn’t consider Harrods a competitor – and in any case ‘the fact that [Harrods] was more than 10 miles away [from the Brighthouse in question] meant its pledge to beat rivals on price didn’t apply’.
Campaigners and consumer advocates feel that consumers are being taken advantage of. But the reality is that many people simply cannot afford everyday essential items up front. That’s why organisations like Fair for You, an alternative to Rent to Own, is vital. It was set up by former Credit Union CEO Angela Clements and unlike other firms in the Rent to Own sector, their business model is not set on profiting from the financially excluded.
Writing for the Financial Health Exchange’s blog in January this year, Angela Clements explained more about what Fair For You can do:
“Fair for You is a CIC and wholly owned by a charity so we have a strong mission and asset lock, with full authorisation from the FCA. Most importantly, we don’t have any shareholders or any owners to please, we are run entirely for the benefit of our customers.
“We are creating a digital high street, partnering with manufacturers and retailers. We provide small loans to our customers to be able to buy quality and branded items at high street prices from our partner retailers.
“Our loans are designed to meet all the needs we identified, so our credit is flexible, supportive, and affordable, within credit union pricing.
“We allow our customers to choose repayments to suit their budget and we encourage customers to overpay when they can, so they have a buffer if they have to miss a payment.”
To find out more on Ed Miliband’s investigation into the Rent to Own sector, follow this link here.