A hire purchase firm is beginning to pay almost £15m in redress to customers after intervention by the Financial Conduct Authority.

The FCA identified the lending application affordability assessment processes and collection processes at BrightHouse, which provides household goods on HP agreements, were not always delivering “good outcomes for customers”, particularly those at higher risk of falling into financial difficulty.

Following engagement with the FCA, BrightHouse has committed to pay £14.8m in cash and balance adjustments to 249,000 customers.

These payments are in respect of 384,000 lending agreements which the FCA said may not have been affordable.

The FCA raised concerns in 2014 and it said that since then BrightHouse has undertaken an extensive programme of work to improve its lending application assessment to ensure that loans are affordable and customers are treated fairly throughout the collections process, including revising its late payment fee structure.

The proposed redress applies to customers in two sets of circumstances:

1) Customers whose circumstances have not been assessed properly at the outset of the loan to determine whether they could afford it and may have had difficulty making payments. Of these, customers who handed back the goods will be paid back the interest and fees charged under the agreement, plus compensatory interest of 8%. And those customers who retained the goods will have their balances written off. This redress totals around £10.1 million for 114,000 agreements entered into between 1 April 2014 and 30 September 2016, covering 81,000 customers.

2) Customers who made the first payment due under an agreement with the firm  which was cancelled prior to the delivery of the goods.  This first payment was not returned to all customers. BrightHouse will refund this first payment plus pay compensatory interest of 8%. This redress totals around £4.7 million for 270,000 agreements entered into after 1 April 2010 covering 181,000 customers.

Jonathan Davidson, executive director of Supervision – retail and authorisations at the FCA said: “During the time in question, BrightHouse was not a responsible lender and failed to meet our expectations of firms in this sector. I am pleased that it has agreed to provide redress to those customers affected by these historic practices.

“This scheme continues our work with the rent-to-own sector to resolve the concerns we have previously identified.

“Responsible lending and the fair treatment of consumers, especially those in financial difficulties or who are vulnerable, are key priorities for us.”

BrightHouse is a trading name of Caversham Finance Ltd. It describes itself as "the UK's largest weekly payment retailer, selling home furnishings, appliances and computing".