UPDATE – in April 2022 the administrators said there was unlikely to be any money to pay any refunds to customers. See below.
On 20 March 2020, BrightHouse went into administration.
BrightHouse sold electrical appliances, furniture, computers and mobiles on hire purchase. Its customers made weekly payments, sometimes described as “rent-to-own”.
Coronavirus has meant that its 240 shops have had to shut and many customers are likely to be asking for payment holidays as their income has fallen and they can’t manage the normal weekly payments.
But BrightHouse’s finances were already precarious before Coronavirus. In February, it was reported that BrightHouse was “close to collapse” and it was said to be applying to the FCA for a Scheme of Arrangement that would let it limit what it had to pay in refunds to customers who had been sold goods on unaffordable credit.
With the new coronavirus problems this month, it is not surprising that BrightHouse has given up and gone into administration.
Some 172,000 people were buying an item from BrightHouse at the end of December.
Background – BrightHouse’s high prices
The FCA found that high product prices plus high interest and the cost of insurance and warranties meant a customer could pay £800 over three years for a fridge that would cost £260 on the high street.
This cost is very high for many BrightHouse customers – only one third are in work and a half have children.
BrightHouse hasn’t been checking properly that the credit it is giving is affordable. The FCA says a loan is unaffordable if paying it leaves a customer so short of money they get behind with essential bills or have to borrow more.
So customers have been making increasing numbers of affordability complaints. Brighthouse has said:
the level of redress claims from customers is putting increasing pressure on the available liquidity in the group.
Are you still paying Brighthouse for an item?
You may be struggling to pay the amounts even if you haven’t been affected by Coronavirus. If this is happening to you, contact BrightHouse using the form here http://www.brighthouse.co.uk/contact-us and ask for the payments to be reduced. Just say what you can now afford to pay.
You may be worried that the goods may be repossessed. This is VERY unlikely to happen.
Repossessing goods at the height of social distancing is going to be very hard. And I expect the administrators would much prefer to get reduced payments from you than have a lot of second-hand items to have to try to sell!
BAD NEWS – there will probably be no money to pay any refunds to customers
The latest administrators report says:
“it is unlikely that a distribution to unsecured creditors will be made.”
That is legal jargon for saying that customers who were sold items on unaffordable finance (“the unsecured creditors”) will not be paid anything at all.
Because of this, there is little point in making an affordability complaint now and I have deleted the section in this article that explained how to do this.