BrightHouse loan customers unlikely to get refunds, say administrators

theguardian.com:

Administrators for the collapsed rent-to-own firm BrightHouse, which specialised in loans for big-ticket items such as fridges and sofas, have warned they will not have enough money to compensate thousands of customers who were left with unaffordable debts.

The latest report from the accountants Grant Thornton, which is managing the administration, shows a plan to set aside £600,000 for payouts to customers who may have been mis-sold expensive loans by BrightHouse has been scrapped.

Meanwhile, a number of creditors have received large sums. They include the supply chain finance firm Greensill, which is itself in administration after collapsing last year. Greensill – or its creditors – have received nearly £31m.

The process will raise fresh questions about how UK insolvency rules prioritise payouts for investors and lenders over customers.

Before it went bust in 2020, BrightHouse offered high-interest rent-to-own contracts to customers who would otherwise struggle to afford the upfront costs of household goods such as fridges, ovens, TVs and sofas. It charged interest of up to 69.9%, which, on top of service and insurance fees, could mean customers were paying two to three times the cost of the item on the high street. Some customers were never able to own the goods if they fell behind on payments.

BrightHouse customers were typically from low-income households receiving state benefits. The decision means some of the UK’s most vulnerable consumers could be missing out on crucial funds, just as the cost of living crisis squeezes finances.

Grant Thornton originally set aside up to £600,000 to deal with more than 11,000 affordability claims from customers who fear they may have been mis-sold loans. But its latest report, published