FCA consults on rent-to-own price cap

On 22 November 2018, the FCA published Consultation Paper 18/35: Rent-to-own (RTO) and alternatives to high-cost credit – feedback on CP18/12 and consultation on a price cap (CP18/35). Our earlier blog on Consultation Paper 18/12: High-cost Credit Review: Consultation on rent-to-own, home-collected credit, catalogue credit and store cards, and alternatives to high-cost credit, discussion on rent-to-own pricing (CP18/12) can be found here In chapter 4 of CP18/35 the FCA sets out proposals for a price cap on rent-to-own (RTO) products. The FCA’s proposals are designed to control prices by: setting a total credit cap of 100%; introducing a requirement on firms to benchmark base prices (prices before any added products like warranties etc) against retail prices; and preventing firms increasing their prices for insurance premiums (e.g. theft and accidental damage cover) or arrears charges in order to recoup lost revenue from the price cap. The deadline for responding to…

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