Financial Conduct Authority (FCA) issues an update on its success in taking over the regulation and supervision of Rent to Own schemes.
In 2014 the financial regular, the Financial Conduct Authority, took over the regulation of Rent to Own schemes as well as mortgage and other loans/credit arrangements from the Office of Fair Trading (under the Consumer Credit Act). Since then, the FCA has tightened up on loans, mortgages and credit suitability and affordability to try and protect consumers from getting into trouble.
What is Rent to Own?
The clue is in the title: Rent to Own or Rent to Buy. Prospective buyers agree to rent a home for a set amount of time before having an option to purchase the property when or before any lease or long term rental agreement expires.
In the Rent to Own market, FCA intervention has resulted in over £16m in compensation being paid back to around 308,000 consumers by two firms, BrightHouse and Buy As You View due to past poor practice and lending, charges and fees that were neither suitable not affordable.
Even now, many rent to own firms have closed and some of the better ones are still struggling to become formally authorised to trade nearly 4 years after the FCA took over.
It is fantastic news that the FCA has done a good job in bringing this market under control to protect vulnerable consumers from a poor result or deal.