ALMOST a quarter of a million customers of the UK’s largest rent-to-own company BrightHouse are to be paid nearly £15 million after the financial regulator found it had failed to be a “responsible lender”.

The Financial Conduct Authority (FCA) announced the £14.8m redress scheme yesterday, after it found that the ways in which the company assessed some customers’ ability to repay and collected payments may have been unfair – especially to people who were at a higher risk of financial difficulty.

BrightHouse – the trading name of Cavendish Finance Ltd – provides household goods to customers who enter into a credit agreement to pay for them on a weekly or monthly basis.

Although the FCA investigation started in late 2014, some of the refunds date back to sales from 2010.

The firm has now committed to paying more than £14.8m, in the form of cash payments and balance adjustments, to 249,000 customers in connection with 384,000 agreements for lending which may not have been affordable and payments which should have been refunded.

BrightHouse has been working with the FCA since late 2014 as the watchdog identified that the firm’s lending application affordability assessment and collections processes did not always deliver good outcomes for customers – especially those at a higher risk of falling into financial difficulty.

In response to these concerns the FCA said the company has undertaken an extensive programme of work to improve its lending application assessment to ensure that loans are affordable and customers are treated fairly throughout the collections process. This includes the revision of its late payment fee structure.

In addition, BrightHouse has identified customers who may have been treated unfairly where its processes fell short of FCA expectations and has committed to putting things right for them.

Customers within two sets of circumstances will be redressed – the first relates to people whose circumstances were not assessed properly at the outset of the loan, to determine whether or not they could afford it and may have had difficulty making repayments.

Those who returned the goods will be repaid the interest and fees charged under the agreement, plus compensatory interest of eight per cent. Customers who kept the goods will have their balances written off.

This redress totals around £10.1m for 114,000 agreements entered into between April 2014 and September 2016 – a total of 81,000 customers.

The second scenario involves customers who made the first payment due under an agreement with the firm that was cancelled before the goods were delivered. This first payment was not returned to all customers.

BrightHouse will now refund the amount along with compensatory interest of eight per cent. This totals around £4.7m for 270,000 agreements entered into after April 2010, and covers 181,000 customers.

BrightHouse will write to all affected customers, some of whom are affected by both sets of circumstances, to explain the refund or balance adjustment that they will receive.

FCA director of supervision Jonathan Davidson said: “During the time in question, BrightHouse was not a responsible lender and failed to meet our expectations of firms in this sector. I am pleased that it has agreed to provide redress to those customers affected by these historic practices.”