We will use your email address only for sending you newsletters. Please see ourPrivacy Noticefor details of your data protection rightsInvalid EmailA surge in compensation claims has left Britain’s biggest rent-to-own company in trouble. Administrators have been on standby with BrightHouse reportedly on the brink of collapsing, according to Sky News , with specialists Grant…
A surge in compensation claims has left Britain’s biggest rent-to-own company in trouble.
Administrators have been on standby with BrightHouse reportedly on the brink of collapsing, according to Sky News , with specialists Grant Thornton put on standby to handle its possible insolvency.
If the retailer went into administration it could put 2,400 jobs at risk.
The weekly payment store which provides loans to customers to purchase electrical items such as televisions and washing machines has been struggling financially for years.
In 2017 BrightHouse was ordered to pay back £14.8million to customers after the financial conduct authority (FCA) found it had treated customers unfairly.
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Claims are reportedly costing BrightHouse about £1m every month, with executives believing the eventual toll could be far greater.
In early February BrightHouse announced a shift away from it rent-to-own model towards high-interest loans, but reports in Sky News suggest the turnaround plans are not working.
Just last year it announced 30 store closures, a tenth of the company’s shops.
From April last year a cap was introduced by the financial regulator to crack down on extra charges in the rent-to-own sector after it was revealed some customers were paying as much as four times the average retail price for essential household goods.
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Sky cited a source close to BrightHouse shareholders as saying that the potential collapse is not inevitable, but has become ‘more likely’ in recent weeks.
A spokesman said: “BrightHouse is exploring a range of options to cap its exposure to claims for historic mis-selling.
“To be successful in this, BrightHouse needs the support of its stakeholders and is currently in active discussions with them.
“Naturally, the protection of value in the business and safeguarding of customers’ interests are core to our planning.”