Credit fatcats raking in sales of almost £1bn as complaints from hard-up customers soar
Just three of the big high-cost credit providers clocked up revenue of £868 million last year. But complaints about this kind of lending more than doubled in the back half of 2017
JUST three big high-cost credit companies clocked up revenue of almost a billion pounds last year.
Rent-to-own lender BrightHouse, and doorstep loan providers Provident and Morses, reported revenues of £320million, £451million and almost £97million, respectively, in their 2017 results. Collectively, that's revenue of just under £868million.
They make their money by charging high levels of interest to some of the poorest people in the UK, who often have little alternative but to put up and shut up with eye-watering costs of credit.
The interest rates charged are more than 1,500 per cent in some cases of doorstep lending.
That's why, yesterday, The Sun launched our Stop the Credit Rip-Off Campaign. Our aim is to help millions of families struggling with high-cost debt in the UK by calling for a cap on the total cost of borrowing.
We want a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount. Find out more about the campaign in the box below.
Why we want to Stop The Credit Rip-Off
WE never want you to pay more than double the amount you've borrowed - whether it's for a new sofa or a loan to help pay your bills.
That's why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to those lenders has more than halved, according to Citizens Advice.
People on the lowest incomes, living in the poorest places, are paying a poverty premium - up to 7 million people have resorted to high-cost credit, according to the Department for Work and Pensions.
People whose wages or benefits don't stretch far enough need to borrow from rent-to-own or doorstep lenders to help pay for things such as an unexpected bill or to furnish their homes.
These come with exorbitant rates of interest - more than 1,500 per cent in some cases of doorstep lending.
It is scandalous that one mum who borrowed cash to help keep a roof over her family's head and ended up paying back over THREE times the original amount.
It's time to stop the credit rip-off.
Here's what we demand:
Rent-to-own
- Cap on all repayable costs at double the item list prices (including fees, add-ons and interest)
- Ban on incentives for all sales staff
- Ban on discounts for existing customers to tempt them into more credit
- Companies to publish example interest rates and costs on all payment options
Doorstep lending
- Cap at double the original amount borrowed
- Stricter affordability checks
- Ban on discounts for existing customers to tempt them into more credit
It's time to Stop the Credit Rip-off.
With doorstep lenders provident and Morses reporting revenue of around £550m last year, it's worrying that official complaints about this kind of credit are rising fast.
Complaints about 'home credit' - another name for doorstep loans - doubled between the last two quarters of the 2017 calendar year, according to the Financial Ombudsman Service.
Have you ever had a problem with a rent-to-own firm or doorstep lender? Tell us your story! Email: [email protected]
Citizens Advice says home credit is the most common form of high-cost credit problem it deals with - it helped an estimated 30,000 people with this type of problem debt in the last year.
Of those 30,000 people:
- Nearly half of them had a long-term health condition or disability
- Only 32% were in employment
- Half were in council tax arrears
- 43% are behind on water bills
- 1 in 10 have more than £2,500 in home credit deb
- a third (34%) had outstanding debt on two or more home credit loans.
Yesterday, Citizens Advice said extending the same rules that cover payday loans to the doorstep lending market - as The Sun is calling for - could save up to £123 million in interest payments on up to 540,000 loans each year.
LATEST ON STOP THE CREDIT RIP_OFF CAMPAIGN
Gillian Guy, chief executive of Citizens Advice, said: “There’s no questioning the evidence - the FCA’s cap on payday lending has been a success. But it’s time now to address the problems consumers are facing in the home credit market.
“Home credit customers need to be protected from getting into problem debt. They are susceptible to the high cost of these loans because of easy refinancing - and there is currently no total limit on what they repay.
“The FCA should build on the success of the payday loan cap and extend their definition of high-cost short-term credit to include home credit, making sure that no-one pays back more than double what they borrow.”