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UK markets watchdog proposes price cap on rent-to-own goods
BRITAIN'S markets watchdog has proposed a cap on prices that people pay for household goods such as televisions and washing machines bought on "rent-to-own" credit from April next year. Rent-to-own (RTO) involves consumers paying a weekly sum for three years, and they typically end up paying three to four times what they would have paid for the item in cash at the start.
"Under the proposed cap, credit charges cannot be more than the cost of the product. In addition, RTO firms will need to benchmark the cost of products against the prices charged by three other retailers," the Financial Conduct Authority said in a statement on Thursday. The proposed cap, which is being put out to public consultation, would save consumers up to £22.7 million (S$40.1 million) a year, the watchdog said.
"We want to stop consumers having to pay many multiples more than the price of a product on the high street," said FCA chief executive Andrew Bailey.
The watchdog is also introducing a two-day "cooling off" period from February on the sale of extended warranties on items bought, effectively banning firms from selling the warranties at the point of sale.
RTO customers are among the most financially vulnerable, with only a third in work, most on low incomes and likely to have missed a bill payment in the last six months, the FCA said. REUTERS