CUF Research and Policy

Rent-to-Own and Alternatives to High Cost Credit: Consultation Response

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In January 2019, the Financial Conduct Authority (FCA) launched their consultation on CP18/35: ‘Rent-to-own and alternatives to high-cost credit – feedback on CP18/12 and consultation on a price cap’ consulting on a proposal to place a 100% price cap on the rent-to-own market. This paper presents a joint response to the consultation submitted by Just Finance Foundation and the Church of England’s Mission and Public Affairs Council.

In it, we strongly support the FCA’s proposal to introduce a 100% price cap in the Rent-to-own market, alongside measures to improve lending practices and promote ethical alternatives.

To be effective however, we think that the current proposals need to be strengthened in at least three important ways:

  • by including arrears charges within the price cap;
  • by strengthening the price benchmarking process, to reduce the risk of the system being ‘gamed’;
  • by introducing new requirements on RTO firms to enable customers to make informed decisions about whether to buy providers’ own theft and accidental damage cover.