FCA publishes evaluation of rent-to-own price cap

The FCA has published an evaluation of its price cap on rent-to-own (RTO) products, which came into force in April 2019.

The evaluation shows that the price cap has been effective in reducing the prices charged by RTO firms. We estimate that the cap led to an average fall in prices of 19% for the two largest firms that were in the market when we intervened, bringing RTO prices much closer to the high-street average.

The highest prices charged by RTO firms have been significantly reduced. For example, some financing prices for the longest term available (plus delivery and installation) reached 3.6 times the average retail price before the cap – this year the highest ratio we observed was 2.3.

The evaluation finds no evidence of RTO firms seeking to increase other prices or charges to make up for the revenue lost to the price cap.

The RTO market has changed considerably since the cap was introduced, particularly following the onset of the coronavirus pandemic. We have introduced a range of measures to support people using consumer credit through the pandemic, including specific guidance on RTO products.

We continue to supervise high-cost credit firms carefully and the consumer credit market remains a key priority for the FCA, as set out in our 2020-21 Business Plan.