BrightHouse has said that it is struggling to maintain customer numbers following new practices which enforce more rigorous customer screening.
The rent-to-own retailers has said that new practices ensuring customers have to undergo more in-depth affordability checks are harming its business, according to The Gaurdian.
Following public criticism of rent-to-own schemes last year, involving MPs accusing companies like BrightHouse of preying on low-income households, the company is pushing to bring its practices in line with the Financial Conduct Authoirty guidelines.
The FCA took over the regulation of rent-to-own schemes in 2014 and voiced concerns about the practices of major players like BrightHouse.
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In the 52 weeks to March 31, the company‘s customer base dropped by 0.4 per cent to 276,200, however average spend per customer per month increased by five per cent.
Its pre-tax profits were £21 million and group sales were up by 5.4 per cent to £370 million. BrightHouse made a onetime investment of £3.3 million to implement its affordability action plan and bring its practices in line with the FCA‘s policies.
Customers often pay up to three times more for products using the scheme, which sees customers pay on a weekly basis with up to 99.9 per cent interest rates. This method of selling has grown since payday loans have been more heavily regulates, with rent-to-own customers increasing by 16 per cent in the second quarter.
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“We have worked openly and constructively with the FCA to implement an agreed programme of activity to ensure that our offer is transparent and affordable for all of our customers,” a BrightHouse spokesperson commented.
“Inevitably this has impacted our profitability in the short term as we train colleagues and implement and embed new processes.
“We are making good progress on this and remain confident that the market size and demand for our proposition remain unchanged.”