The FCA’s announcement it will cap the cost of rent-to-own goods from 1 April 2019 will help the hundreds of thousands of people who use the high-interest agreements, Citizens Advice says.
The charity helps approximately 5,000 people a year with rent-to-own issues. It has also welcomed the decision by the regulator to place restrictions on other charges, including late payment fees.
Last year, research from Citizens Advice found that people who were at the time signed up to a rent-to-own agreement could save £62 million over the payment period on 245,000 products if a cap was enforced.
Gillian Guy, Chief Executive of Citizens Advice, said:
“This cap, which we’ve campaigned for, is a win for those struggling with the runaway costs of rent-to-own agreements. We’re delighted it will now be introduced.
“The FCA has recognised the massive harm caused by the crippling interest rates on rent-to-own deals. This cap will stop people from paying over the odds compared to similar products on the high street and falling into further debt when costs spiral out of control.
“Our evidence has repeatedly shown well-designed caps can reduce the harm high-cost credit can cause. Where these credit products cause more harm than good, for example doorstep loans, the FCA should move to introduce similar protections.”