BrightHouse, the pay weekly store which charges high prices and very high interest rates, is being made to refund £14.8 million to customers by its regulator, the FCA.
BrightHouse prices are often extremely high and the charges for insurance and interest make the total cost paid massively more than what a similar item in a normal shop would cost – as my “improvement” to BrightHouse’s current Halloween promotion above points out.
So the refunds are good news. But do they go far enough?
UPDATE – I now have an article with a template letter if you want to ask for a refund.
The true cost of a washing machine from BrightHouse
This 2016 report gives an example:
BrightHouse: Cheapest washing machine (with the mandatory 5 star service) is £471.00. Purchased using weekly repayment over 3 years (69.9% APR), it would cost £936.00 (or £1,056.12 with the optional product insurance, which is required if user does not have contents insurance).
Alternative: Cheapest similar product on high street is £249.99 (or £349.97 with delivery, disposal and 3 year
breakdown plan). Purchased using a weekly loan from a Credit Union over 3 years (42.6% APR), it would cost a total of £491.19.
There are also much cheaper “pay weekly” alternatives available, such as Fair For You.
Will you get an automatic refund?
BrightHouse will be writing to two groups of people offering refunds. If you are in one of these groups, you don’t have to do anything now, just wait for a letter.
If you aren’t sure if you are in one of these groups, you can call BrightHouse on 0800 30 40 80 – this is a new dedicated helpline just for questions about the FCA ordered refund they will be able to say if you are on the list to receive a refund letter, but not what the letter says. If you haven’t received a letter by the end of 2017 you should contact BrightHouse and ask why.
But if you have moved since you bought the item where you expect a refund and you don’t think BrightHouse knows where you live, contact BrightHouse now to inform them of your new address – give your old address, email address and any order reference details if you still have them.
People who were sold items without proper affordability checks
BrightHouse should have made checks that customers would be able to afford the repayments for the goods they were buying. These checks were often not very good!
BrightHouse has identified 81,000 customers who should not have been sold 114,000 items. If they returned the goods because they were struggling, they will get a refund of the interest and fees charged under the agreement, plus compensatory interest of 8%. If they kept the goods but still owe a balance, they will have their balances written off.
This compensation totals around £10.1 million so that will be an average refund of £125. These affordability refunds are only being given for purchases between 1 April 2014 and 30 September 2016.
People who were not given a refund when they cancelled an order
181,000 customers from April 2010 cancelled an order within the 14 day period allowed but never had a refund of the first payment they had made. BrightHouse will refund this first payment plus pay compensatory interest of 8%.
This compensation totals around £4.7 million for 270,00 agreements, as some customers will be due a refund for more than one item – the average refund will be about £17.
What if you don’t get an automatic refund?
There are two groups of people who may have a case for a refund who aren’t going to be offered one.
First, people who had affordability problems before April 2014. This date was picked because that was the point when the FCA became BrightHouse’s regulator. But before then they were regulated by the OFT who had pretty much the same rules on affordability as the FCA does. So why shouldn’t they get a refund too?
Second, there may be people who had affordability problems after 2014 who weren’t detected by whatever filter BrightHouse was using to determine who gets a refund.
This is similar to the automatic refunds that the FCA made Wonga give in 2014/2015. Great for those people that got them, but there are thousands of people who have been successfully complaining about Wonga’s payday loan affordability since then who either had problems before 2014 or who weren’t included in the automatic trawl for some reason.
These Wonga affordability complaints are being upheld 77% of the time by the Financial Ombudsman at the moment … perhaps the same may apply if other people ask for refunds from BrightHouse?
If you want to complain, here is a template letter to BrightHouse to help.