Citizens Advice Scotland (CAS) has called for consumers to be protected following the collapse of Brighthouse.
The firm has collapsed following a surge in customer compensation claims for alleged historic mis-selling of agreements, tougher FCA regulation on pricing and an overall downturn in business.
CAS has said that consumers with agreements with Brighthouse should be allowed to keep the goods they have bought and should not be pursued for debts that they would struggle to pay. This has been made even more imperative with the outbreak of Covid 19 making it impossible to source replacement goods.
More also needs to done to give Brighthouse customers alternatives. Many Brighthouse customers have few borrowing choices and are reliant on being able to buy goods weekly. Now that Brighthouse has gone people may struggle to finance buying white goods, electricals and items of furniture that they would have previously bought from them. CAS is calling for the government to do more to encourage ethical and affordable lending to help fill the gap left by Brighthouse and other high cost credit lenders.
CAS Financial Health spokesperson Myles Fitt said:
“It’s absolutely vital that consumers who have agreements with Brighthouse are protected through this process. Now would be an extremely inappropriate time to attempt to repossess goods that Brighthouse sold, if people have fallen behind on their payments.
“In terms of the debts still owed, the standard here should be what eventually followed the collapse of Wonga, with people not pursued for the debts anymore.
“The government must also do more to support ethical and affordable lending as the high cost credit lenders leave the market, because people with poor credit will still need to buy furniture, electricals and white goods affordably.
“A cap has been in place for the past year or so which protects consumers on low incomes from predatory lending such as the cost of credit for the rent to own sector, something CAS had previously called for. However what seems to have caused the collapse of Brighthouse was a surge in complaints about affordability checks going back more than 6 years.
“If people believe they have been given finance from Brighthouse without proper affordability checks they should make a complaint now.
“In the meantime customers should continue making their payments until they hear from the administrator. If people are struggling to make these payments they can ask for them to be reduced or a payment break.”
People can get debt/money advice from their local Citizens Advice Bureau or from our website.