PerfectHome to repay millions to 37,000 customers

Published by Edmund Greaves on 20 March 2018.
Last updated on 20 March 2018

PerfectHome to repay millions to 37,000 customers

More than £2.1 million will be repaid to 37,000 customers of PerfectHome under a redress scheme approved by the financial regulator.  

The ‘rent-to-own’ business, which provides household goods such as televisions and furniture on hire-purchase agreements, will refund customers in the form of cash payments and balance write-offs.

It comes after the Financial Conduct Authority (FCA) found that the company’s affordability assessments were inadequate and did not take into account customer circumstances. This lead to many customers being issued with loans they could not ultimately afford.

On top of this, the FCA found failings with PerfectHome’s collection processes, with customers being charged late fees for arrears on insurance contracts, contrary to the firm’s own policy. While customers who purchased insurance before receiving goods did not often receive refunds of their first payment when the agreement was cancelled before delivery.

The FCA says the company has responded to these concerns and has conducted a “major programme of improvements” to make loans affordable and to treat customers more fairly.

Jonathan Davidson, executive director of supervision – retail and authorisations – at the FCA comments: “Our key priority is to ensure all financial firms lend responsibly and treat consumers fairly; especially those in financial difficulties or who are vulnerable.

“Unaffordable lending is not acceptable in any circumstances. I am pleased that the firm has taken steps to address this and provide redress to those customers affected.

“PerfectHome has recently been authorised by the FCA following substantial improvements to its business practices. This package of redress continues the FCA’s work with the rent-to-own sector to resolve the concerns we have previously identified.”

I am a PerfectHome customer, will I get a refund?

PerfectHome will contact all affected customers and explain any refunds or balance write-offs they may be due. Customers needn’t take any action.

Around 2,425 customers will have their debts written off by the firm, and they will become owners of the goods they purchased in the process.

Here’s what’s happening: The scheme will redress customers in four particular circumstances:

  • £1.7 million will be refunded to 4,000 customers where it was found that affordability assessments were not completed satisfactorily. This meant that in some cases, customer circumstances were not sufficiently considered and loans were issued that may not have been affordable for customers.

The remaining redress relates to:

  • incorrectly charged late fees;
  • insurance payments made prior to the delivery of goods; and 
  • initial payments made against sales that were subsequently cancelled. 

What does PerfectHome say?

Mike Sweetland, chief executive of PerfectHome, says: “We were authorised by the FCA in December last year. As we worked towards this, the FCA advised us that some of our historic practices did not meet the standards it expected as the new regulator of consumer credit firms.

“Our processes around theft and accidental damage insurance, cancelled sales and a smaller number of affordability checks did fail some of our customers and have all been stopped.

“We wish to say sorry to our customers and we’re putting that right. Those affected will be receiving letters from me personally with information about their redress payments which will be made by cheque or balance adjustments. 

“As part of our authorisation process with the FCA, we worked meticulously through all our policies and practices and made significant improvements such as the centralisation of underwriting to further improve customer credit and affordability checks - which include the assessment of customers’ income and expenditure. After these significant changes, I can say with confidence that the issues of our past could not happen today.”

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