Rent-to-own retailer BrightHouse has revealed that more ‘detailed’ and ‘extended’ affordability assessment checks has hindered trading.
BrightHouse said that the new assessment criteria is having a ‘material impact on trading’ with its contract portfolio standing at £513.8m at the week ended 12 June 2016, compared to £560.1m at 31 March 2016.
Regulation body, the Financial Conduct Authority (FCA) – which took over from the Office of Fair Trading (OFT) back in 2014, revealed earlier this year that it was concerned with some rent-to-own retailer practices, with all firms now required for full authorisation.
BrightHouse remains in talks with the FCA as it processes its application, which awaits approval, and revealed a cost of over £3m in its ‘affordability action plan’ to meet FCA regulations.
Following the implementation of stricter customer acceptance criteria, BrightHouse has seen customer numbers fall by 0.4% to 276,200 from 277,400 in 2015.
According to its latest filed accounts ended 31 March 2016, group sales were up by 5.4% to £370.7m, with a pre-tax profit before exceptionals of £21m – in line with 2015 – and EBITDA of £56m, down 0.1% from £56.1m last year.
Stated within the accounts, filed at Companies House, BrightHouse chairman Henry Staunton, said: “We have made changes to our customer sign-up process to include a more detailed assessment of income and expenditure. These changes are having a material impact on the level of customer sign-ups and consequently on profit as we enter the new financial year.”
During the period, BrightHouse continued investing within the infrastructure of the business, opening 14 new stores, bringing its total store network to over 300 nationwide, and two local distribution centres.