An MP from the borough has welcomed a heavy penalty for notorious rent-to-own company BrightHouse after she chaired a report on the sector.
Makerfield parliamentary representative Yvonne Fovargue welcomed the development as her time in charge of the All-Party Parliamentary Group (APPG) on Debt and Personal Finance has included overseeing a highly-critical assessment of the company.
The report’s findings were picked up by the Financial Conduct Authority (FCA), which has now ruled the business must pay £14.8m in redress to 249,000 customers as it was not a responsible lender.
The money comes from 384,000 agreements which the watchdog says were not affordable and payments which should have been refunded.
Ms Fovargue said BrightHouse’s comeuppance now needs to be followed by concerted action to prevent people on low-incomes ending up out of pocket for white goods and other household items.
She said: “BrightHouse has flouted reasonable lending standards for decades so the FCA’s actions today are welcome.
“This is a significant compensation package putting money back in the pockets of thousands of low-income families.
“The APPG on Debt and Personal Finance highlighted problems with the rent-to-own sector in 2015 and the FCA must remain vigilant and continue to tackle problems with high cost lenders.
“Alongside regulatory action, we now need Government to do more to promote safer forms of credit for the most financially excluded.
“We welcome social enterprise initiatives like Fair For You which are giving families access to essential households goods at prices they can truly afford.
“Innovative social lending partnerships now need to be scaled and extended if we are to create a society that truly works for everyone.”
The company, which provides goods on hire purchase agreements, has been working with the FCA since late 2014 since problems with its systems were first identified.
The firm has had to extensively reshape its lending application process to ensure loans are affordable and customers are treated fairly.
In particular BrightHouse has had to revise its late payment fee structure.
Customers who handed back the goods will now be paid back the interest and fees charged under the agreement, plus compensatory interest of eight per cent,
Those who kept their items will have their balances written off.
BrightHouse also has to return the first payment and pay compensatory interest to customers who initially handed over money under an agreement which was cancelled prior to the delivery of the goods.
The company will write to all the customers involved to explain the refund or adjustment to their balance they will get.