Citizens Advice Scotland responded to Financial Conduct Authority's Discussion Paper on Rent to Own, answering questions about 'What alternative solutions could there be to address harm from high prices?' and 'What issues should the Financial Conduct Authority should take into account in carrying out further work on a price‑cap'
CAS made the following suggestions to reduce harm from high prices:
- Rent-to-own retailers should work with customers to assist them in improving their credit rating and ensure they are not lent more than is affordable.
- The Financial Conduct Authority should use their regulatory powers to ensure that that there is genuine competition within the rent-to-own sector.
- Rent-to-own retailers should carry out credit checks for each item a consumer wishes to purchase, regardless of whether or not they have an existing agreement with the retailer.
- There should be a limit on the number of goods a consumer is able to access from rent-to-own retailers at one time.
- Sales staff in rent-to-own retailers must provide all the information a consumer could require to make an informed decision, this includes stating that purchasing insurance and/or aftercare if not compulsory.
CAS also highlighted some potential options for low income consumers seeking to purchase goods at an affordable cost. These included not for profit providers; credit unions; Community Development Finance Initiatives; furniture recycling projects; housing associations; Community Care Grants; charitable grants; and charity shops.
CAS was pleased to see that this is being considered. However, we highlighted the need to balance the harm to consumers of the rent-to-own sector with closing off this avenue of credit