The FCA has published a consultation paper (CP18/35) setting out its proposals to introduce a price cap on rent-to-own (RTO) firms, summarising the feedback to the consultation carried out in May 2018 on high-cost credit (CP18/12) , and its final rules on a point-of-sale ban on extended warranties alongside the sale of an RTO agreement.
In its consultation carried out in May 2018, the FCA considered introducing a price cap in the RTO market. It has since analysed the market further and has concluded that intervention is needed. As a result it is now consulting on introducing such a price cap from 1 April 2019 to address harm to vulnerable consumers from high prices.
Furthermore, following CP18/12, the FCA is making the following final rules on the sale of extended warranties by RTO firms:
- a point-of-sale ban on the sale of extended warranties alongside the sale of the RTO agreement. Firms will be required to allow 2 clear days before consumers can actively opt-in to buy these; and
- a new requirements on firms to provide information to consumers to help them decide whether to buy the extended warranty – including information on the price in terms of weekly, annual and length-of-contract cost, as well as how the extended warranty relates to the manufacturer’s warranty and any theft and accidental damage insurance.
The consultation closes on 17 January 2019 and feedback is expected to be published in March 2019.