Community group scores victory against high-interest credit shops
Published 12 October 2012
A group of residents in the Stockton-on-Tees area has persuaded the country's three biggest rent-to-own (RTO) companies to adopt a new customer charter.
Brighthouse, PerfectHome and Buy As You View provide household goods and electrical items like washing manchines and TVs on rental agreements to lower income households with an option for the consumer to buy at the end of the rental period.
Interest is as high as 49.9 per cent in the RTO sector, which has come under criticism from the Office of Fair Trading for targeting low income families unable to obtain credit elsewhere.
The customer charter commitments include ensuring that goods are competitively priced and customers are given a range of payment options.
They also bind the firms to referring struggling customers to independent debt advisers and limiting default charges to actual costs.
The charter is the result of 16 months of tough negotiations between the three RTO companies, Church Action on Poverty, the Centre for Responsible Learning, and Thrive, the community group based in Thornaby, Stockton-on-Tees.
Niall Cooper, National Co-ordinator of Manchester-based Church Action on Poverty, said: “We are delighted with the commitments that have been made so far by companies in this sector.
"They go beyond those contained in the codes of practice of their trade associations and are a real step forwards.
“We look forward to working with the firms on an ongoing basis in respect of other issues, including exploring the benefits of data sharing for low income consumers.
"We are also now looking to Government and the consumer credit trade associations to ensure these commitments are taken up by the entire sector.”
Thrive members pressed for the charter out of a desire to tackle the huge debt problems on their estates.
As a full-time guardian for two teenage granddaughters, Thrive member Maureen Hagan, 58, of Redcar, had no savings and was reliant on benefits.
She was forced to use PerfectHome and Buy as You View to purchase a new sofa, bed, washer and cooker.
She said: “There's nowhere else for a person with a bad credit rating or no credit rating to go because they won't have you.
“My main issue was for them to give us a credit rating. And they've got to publicise that rating to other companies to know that we are good payers.
“People have listened to me, a normal everyday person. If I've helped just one person then I've achieved a lifetime's ambition. Then they're not going to be in debt like I've been in debt.”
CAP and Thrive now want to see the whole sector sign up to the charter.
David Harwood, Company Secretary at Brighthouse, said: “Thrive has done a marvellous job instigating industry talks in the Rent-To-Own sector. We’re looking forward to continue working with both Centre for Responsible Credit and Church Action on Poverty and sharing best practice going forward.”