Embattled rent-to-own electricals retailer BrightHouse has set out a plan to permanently reform its controversial consumer practises as a bid for survival as it continues talks with lending watchdogs.
The chain, which is reportedly working with Rothschild and the City law firm Freshfields, submitted a business plan to the Financial Conduct Authority (FCA).
The watchdog is due to scrutinise the plan and determine if BrightHouse should be allowed to continue to lend.
The situation is reportedly urgent, with the retailer facing quarterly rent payments on its 311 stores at the end of March – as well as heavy debts.
BrightHouse – owned by private equity firm Vision Capital – was targeted by the FCA recently over its controversial hire-purchase practises, such as alleged overcharging and hard-sell tactics targeting vulnerable consumers.
The retailer has since been under financial strain as the FCA forced it to undergo tougher checks on customers’ credit history before lending money to them. They were also banned from issuing punitive late payment charges.
BrightHouse owes bondholders £220 million in notes that are due for refinancing by next year.
However, there are fears the FCA will deny BrightHouse’s lending licence or if the watchdog’s probe takes too long it would prevent refinancing.
Last week, BrightHouse confirmed it would shut down 28 stores before the next rent demands are due, as part of a plan to be “leaner and more cost effective”.