Something good to come out of this Brighthouse go into administration -
At last, it’s payback time for BrightHouse
For hard-pressed families wanting household goods, the monthly payments at electricals store BrightHouse can be tempting. But extraordinary interest payments can mean a £600 computer at Currys costs more than £2,000 at BrightHouse, while an easy-looking £7.50-a-month TV spirals into a bill of £1,100.
Lisa Brady, 30, who lives in Hamilton, Scotland, and has four children, is typical of the company’s customers, often young single mums. She tells Guardian Money: “I’m on benefits and it has been my lifeline, but the payments are just shocking.”
She went to BrightHouse to buy her autistic son a computer which, she said, would have cost about £600 at Currys. But with repayments, that turned into £2,287 over 26 months. “My advice to other mums is to look about first, avoid BrightHouse,” she says.
This week BrightHouse was ordered to repay £14.8m to nearly 250,000 customers after the Financial Conduct Authority found it had not been a “responsible lender”. The regulator said that, in many cases, BrightHouse had not properly assessed a customer’s ability to repay – and they would now be compensated.
The weekly payments advertised in big letters throughout the stores appear affordable – £7.50 for a Beko steel cooker or a Baird 43-inch UHD smart TV. But the small print underneath reveals that the cooker costs £1,132.50 at an APR of 69.9% over 151 weeks, including a £95 delivery and installation fee; the TV £1,170 over three years.
Laura Hutchison, who lives with her daughter Ellie in Galston, Scotland, and is on benefits, was paying off an L-shaped sofa from BrightHouse over several years but, she says, only managed £1,800 out of £2,500, so never ended up owning it. She reckons it would have cost £500-600 on the high street. “I’d never buy anything from BrightHouse again,” she says.
She has since found Fair For You, a not-for-profit credit provider that funds household goods. Hutchison has bought a bunk bed, double bed and vacuum cleaner and says it took no more than six months to pay off an item. “They cost £20 or £30 more than a high street shop.” BrightHouse is keen to stress that items in the store can be bought for less if they are paid off more quickly.
Despite these sky-high costs, many say it can be the only way to get the sort of electrical goods they want. When we visited its Elephant & Castle shop in south London, several customers told us the weekly payments were affordable and convenient.
Pauline and David Heat, a retired couple, come in every Thursday to make their weekly payment of £116.92, to pay off eight items, including a sofa, freezer, vacuum cleaner and two TVs. David gets monthly pension payments of £859 while his wife receives £578.
Isata Sillah, who works in a nursing home, has paid off 23 items over 15 years, and is now paying £35 a week for a sofa and a Nintendo games console. “It’s easy to pay weekly,” she says.
But “rent to own” providers remain deeply controversial. An all-party parliamentary group on debt and personal finance, which conducted an inquiry two years ago, found customers easily pay three times as much as the high street, and many never even get to own the goods as they fall into arrears.
Around 400,000 households use it and have amassed debts of £500m. They have an average annual income of £16,100 and are likely to have other high-cost debt.
The typical rent-to-own customer is a young single mother who lives in social or private rented accommodation and is wholly or partly reliant on benefits, according to a 2016 report by the Financial Inclusion Centre thinktank.
Gareth Evans, co-director of the thinktank, says: “We are talking about the poorest and most vulnerable of society. The threat of having essential household goods repossessed when they may have already made many months or even years worth of payments can often lead to users prioritising these repayments over food or other priority bills.”
The compensation scheme at BrightHouse comes after the firm was forced to introduce stricter affordability checks. It lost 44,000 customers, closed 29 stores and racked up an £111,000 loss in the year to March.
BrightHouse said it has introduced more flexible repayment terms and made its own insurance and repair cover non-mandatory. A spokesman for BrightHouse said: “We seek to offer choice and give respect to people who are excluded from mainstream credit. As long as it’s affordable and people are making an informed decision they should be allowed to choose how to spend their money.”
)
