Controversial rent-to-own retailer PerfectHome has been ordered to pay £2.1 million back to customers after it was found to have failed to properly assess its customers financial situations.
The Financial Conduct Authority (FCA) ruled that PerfectHome’s assessments did not properly consider customers circumstances leading them to issue loans that could not be paid back.
Many were charged late fees for their arrears on insurance contracts which went against the firms own policy, and others failed to receive a refund of their first payment when their agreement was cancelled.
In light of this a £2.1 million redress package has been agreed which will see 37,000 customers receive cash payments. 2425 of those will see their debts written off and become owners of the goods they owe Perfect Home money for.
Customer reportedly do not need to take any actions, and will be contacted by the retailer explaining the refund or balance adjustment.
“Our key priority is to ensure all financial firms lend responsibly and treat consumers fairly, especially those in financial difficulties or who are vulnerable,” the FCA’s executive director of supervision for retail and authorisations Jonathan Davidson said.
“Unaffordable lending is not acceptable in any circumstances. I am pleased that the firm has taken steps to address this and provide redress to those customers affected.”
PerfectHome chief executive Mike Sweetland added: “We were authorised by the FCA in December last year. As we worked towards this, the FCA advised us that some of our historic practices did not meet the standards it expected as the new regulator of consumer credit firms.
“Our processes around theft and accidental damage insurance, cancelled sales and a smaller number of affordability checks did fail some of our customers and have all been stopped.
“We wish to say sorry to our customers and we’re putting that right. Those affected will be receiving letters from me personally with information about their redress payments which will be made by cheque or balance adjustments.
“As part of our authorisation process with the FCA, we worked meticulously through all our policies and practices and made significant improvements such as the centralisation of underwriting to further improve customer credit and affordability checks – which include the assessment of customers’ income and expenditure.
“After these significant changes, I can say with confidence that the issues of our past could not happen today.”