Thousands of customers of failed rent-to-own company BrightHouse have been warned that they will probably not get any money back for mis-sold loans.
The administrators for the company, which collapsed in March 2020, had earmarked £600,000 to handle 11,000 mis-selling claims, but the future of the cash pot is uncertain - along with the compensation former customers were hoping for.
BrightHouse offered loans for expensive items like white goods and sofas, which consumers then paid back with interest of up to 99.9%, but in 2017, the company was ordered to pay back £14.8million to customers after the Financial Conduct Authority (FCA) found it had treated customers unfairly.
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A report for BrightHouse's administrators, Grant Thornton said: "Given the likely significant volume and complexity of customers’ affordability claims … it is the administrators’ expectation that the cost associated with assessing these claims would far exceed the funds available for distribution."
BrightHouse went into administration in 2020. Earlier the same year, it was said to be paying out around £1million a month in claims, with executives believing the eventual toll could be far greater. In 2019 it announced 30 store closures. At the time of its collapse, BrightHouse, was the largest rent-to-own company in the United Kingdom, with 240 stores.
The news comes just a couple of months after BrightHouse's one-time competitor, PerfectHome, fell into administration in March this year. PerfectHome became the UK's largest rent-to-own firm after Brighthouse went into administration in 2020, and had around 30,000 customers, although it had not taken on any new customers since June 2021.
The Financial Conduct Authority (FCA) said: "All existing agreements remain in place and are not affected by the administration. This means customers can continue to retain possession of their goods."
The administration is being handled by Teneo. A Teneo statement on the PerfectHome website said: "Customers will continue to receive the same level of service as they have throughout the wind-down and should not notice any changes as a result of the administration".
PerfectHome closed 17 of its remaining stores in 2018, leaving just one in Clayton Street, Newcastle. However later that year, the Newcastle store closed and the business became online only.
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Companies that go into administration have not gone bust.
Instead, administrators will try to find buyers for all or part of the company and work out how to take the business forward if possible.
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