The End Child Poverty coalition has welcomed the Financial Conduct Authority’s announcement that it will consider a cap on the total cost of goods bought through rent-to-own.
Anna Feuchtwang, Chair of End Child Poverty and Chief Executive of the National Children’s Bureau, said “We welcome the FCA’s announcement. 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
“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 for a cap of not more than double the total cost of rent-to-own goods and welcomes the move to consider banning the sale of warranties at the time of purchase. 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 has come as the Government has frozen children’s benefits. End Child Poverty is calling on the Government to end the freeze and 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.
GMPA is a member of End Child Poverty.