The End Child Poverty coalition has today welcomed the Financial Conduct Authority’s announcement that it will consider a cap on the total cost of goods bought through rent-to-own as an important step in protecting some of the most financially vulnerable households from high levels of debt.
Anna Feuchtwang, Chair of End Child Poverty and Chief Executive of the National Children’s Bureau, said
“We welcome the Financial Conduct Authority’s announcement today that it will consider introducing a cap on the cost of rent-to-own goods. It is the poorest families that pay the highest prices for essential household items. By considering a cap on the total cost of rent-to-own goods, the FCA has recognised the need to protect households who incur real financial hardship simply through purchasing essential items such as fridges and washing machines”
“As child poverty increases across the UK it is imperative that regulators and businesses play their part to ensure families are not forced to service high levels of debt at the expense of putting food on the table, or heating their home and we urge the FCA, at the end of their consultation, to impose a cap.”
The End Child Poverty coalition is calling on the FCA to introduce a cap of not more than double the total cost of rent-to-own goods and for companies to improve affordability checks and their treatment of customers in financial difficulty. The coalition welcomes the move by the FCA to consider banning the sale of warranties at point of sale as a further means of protecting low income households from unnecessary debt.
In their report Feeling the Pinch: Furnishing your home with rent-to-own published in November 2017, the coalition found that rent-to-own customers have the lowest incomes of all high-cost credit customers and are likely to be in arrears for other households bills. Unable to afford to buy goods outright, low income households often have little choice than to buy essential goods through rent-to-own.
The rise in families turning to high-cost credit, like rent-to-own, has come as the Government has frozen children’s benefits at a time of rising cost of living and substantially reduced the interest free credit that was previously available in the form of Crisis and Budgeting Loans. End Child Poverty is calling on the Government to end the freeze on children’s benefits and to create a single interest free fund for anyone eligible for Universal Credit so that low income families can access an alternative to high-cost credit.
Notes to Editors
- For further comment please contact Sorana Vieru at Sorana.Vieru@stepchange.org StepChange is a member of the End Child Poverty coalition.
- End Child Poverty is a coalition of organisations from across UK civil society campaigning for an end to child poverty in the UK.
- End Child Poverty’s report Feeling the Pinch: Furnishing your home with rent-to-own is available here