The Network for Integrated Behavioural Science  
University of Nottingham
  
Signature on an agreement

Professor John Gathergood worked with the Financial Conduct Authority (FCA) to design and implement research into the effect on consumers of using rent-to-own financial products.

This resulted in a consultation paper, published by the FCA in November 2018, which ultimately led to a policy proposal to limit product pricing and interest charges in the rent-to-own market.

In March 2019 the FCA announced the introduction of a price cap to protect some of the most vulnerable customers in the UK in the rent-to-own (RTO) sector.  The cap, which was introduced from 1 April 2019, was estimated to save consumers in the UK up to £22.7 million a year.


The measures included:

  • setting a total credit cap of 100%
  • introducing a requirement on firms to benchmark base prices (including delivery and installation) against the prices charged by three mainstream retailers
  • preventing firms increasing their prices for insurance premiums (such as theft and accidental damage cover), extended warranties, or arrears charges, to recoup lost revenue from the price cap.​​​​​

As a result of the Covid-19 pandemic, the FCA announced temporary guidelines in April 2020 (updated in July 2020), which addressed payment referrals with rent-to-own, buy-now-pay-later and pawnbroking agreements.



Posted on Wednesday 19th December 2018

NIBS - Network for Integrated Behavioural Science

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email: chris.starmer@nottingham.ac.uk