BrightHouse flotation into question amid Parliamentary inquiry

A Parliamentary inquiry into the company’s lending practices has thrown the flotation of the fast-growing “rent-to-own” goods chain BrightHouse into question.

The All-Parliamentary Group on Debt and Personal Finance announced yesterday that it intends to examine the charges which are imposed by rent-to-own retailers such as BrightHouse on their mainly low-income customers.

BrightHouse, which is almost 90% owned by the private-equity firm Vision Capital, last month asked the investment bank Rothschild to assess a possible flotation or sale.

At that time it was estimated that the listing could value the company between £500m and £750m.

All-party groups lack the clout of formally constituted Parliamentary committees and has no legislative powers, but the inquiry might still impede the progress of the listing if it concludes the firm is behaving in a predatory manner.

BrightHouse offers customers – many of whom cannot access loans – weekly payment plans on household products such as sofas, microwaves and televisions.

Some of its annual interest rates on products are as high as 69.9%. The retailer has been regulated by the Financial Conduct Authority since April.

“Rent-to-own outlets have become an increasingly common sight on our high streets in recent years. But despite this, there is little general understanding of how they operate and how they differ from conventional shops,” said Labour’s Yvonne Fovargue, who chairs the Parliamentary group.

“Our inquiry will look in detail at the products and services they offer and will ask whether customers are getting a good deal.”

The Parliamentary group also noted that customers can be obliged to take on a bundle of services at the time of the initial credit agreement, which includes delivery and insurance cover.

Consumer groups have questioned whether this amounts to good value for money and have argued that customers should be protected from such contracts.

BrightHouse has 270 stores across the country. It turned over £333m last year and delivered underlying profits of £52m, a 10% year on year increase.