This paper sets out final rules on a price cap in the rent-to-own market and summarises feedback to CP18/35.
In November 2018, we consulted on introducing a price cap in the rent-to-own (RTO) market to address harm from high prices paid by vulnerable consumers.
Today, we confirm that we are going ahead with our proposals to introduce a price cap in the RTO market. We believe that this will be effective in reducing harm from high RTO prices.
We want to bring down prices on RTO agreements where the overall costs to consumers are high compared to other retailers’ prices. Our price cap is designed to do this by:
In light of feedback received during the consultation process, we will review the price cap and the effect benchmarking has on product prices a year earlier than planned – beginning in April 2020. This review will also look at the effectiveness of our rules on other charges – insurance, extended warranties and arrears.
This document should be read by firms offering household goods on hire purchase and/or conditional sale, consumer groups and debt advice organisations.
It will affect consumers considering purchasing household goods using RTO from 1 April 2019.
The price cap rules come into force on 1 April 2019. They will apply from that date to any new products RTO firms introduce to the market for the first time.
For products that RTO firms are already offering, the rules will apply either at the point the RTO firm raises the price or 1 July 2019 (whichever date is sooner). Micro-enterprises will have until 1 October 2019 to do this.
RTO firms should take steps now to ensure that they comply by these dates.