BrightHouse stores in Suffolk and Essex escape the axe, but one store faces a backlash over its location
PUBLISHED: 18:30 06 February 2019 | UPDATED: 09:08 07 February 2019
Although local stores are not among the 30 closing today, questions remain whether the rent-to-own retailer should be operating inside one of our region’s Poundland stores.
Rent-to-own retailer BrightHouse is to close 30 stores over the next two months across the UK, and a store in Thetford is among those that will be shutting down.
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One of the stores that has been spared in our region is located inside a Poundworld store on Pier Avenue in Clacton-on-sea.
It is one of only four Brighthouses across the UK that opened last year inside Poundland shops.
The location means the company can target trade from passing bargain hunters, as well as save rent by not operating its own premises.
But questions are being asked over whether BrightHouse should have been given permission to operate inside a Poundland store.
People who are struggling financially can be sold household and personal items through BrightHouse on repayment plans, which charge as much as 69.9% interest.
Customers are drawn in by what the firm calls “affordable weekly repayments” - which might be around £18 a week for a TV. But the plans can go on for years, and can result in consumers paying more than double for their purchases.
Sue Anderson, a manager for StepChange, which offers free debt advice, explained that her charity starts from the premise that “credit should be bought, not sold”.
“By this, we mean that dangling credit as a temptation to people to buy goods or services that they otherwise would not do is unhelpful, and can contribute to debt problems,” she explained. “We do not underestimate the fact that people may end up using rent-to-own providers like BrightHouse in the absence of better, lower-cost alternatives to buy essential things like fridges and washing machines.
“But with the Financial Conduct Authority recently announcing a clampdown on the exceptionally high cost of using rent-to-own as a source of buying goods on credit, it’s inappropriate to create the impression - through store location, for example - that rent-to-own somehow offers value for money or a low-cost option to buy goods, when the opposite is true.”
Last year the Financial Conduct Authority (FCA) watchdog proposed the introduction of a price cap on firms like BrightHouse, with the aim of protecting consumers from being charged excessive costs on essential household items.
The City watchdog said customers were often among the most financially vulnerable people in society, and in some cases they were paying up to four times the average retail price due to high interest payments on items.
In 2017, BrightHouse paid out £14.8 million in redress to 249,000 customers after the FCA found it did not act as a “responsible lender”.
As well as in Clacton, Poundland stores that house Brighthouse shops are in Loughborough, Durham and Langney in Eastbourne.
Martyn James, of complaints-handling site Resolver, said he thought that targeting people in shops that serve people on a tight budget and “tempting them with overpriced credit” is “deeply troubling”.
“Companies like Brighthouse trade on the illusion you can but household foods for a few pounds a week. But the reality is you can pay far more than the full price due to their excessive interest,” he said. “This credit is dangerous and Poundland customers should avoid at all costs.
“I hope Poundland have a change of heart and stick to the bargains, not this crippling form of credit.”
The full list of BrightHouse stores closing: