Can't Repay Bounce Back Loan? Get Free Advice

Require Immediate Support? Free Director Helpline: 0800 644 6080

Real Business Rescue

Free Director Helpline: 0800 644 6080

BrightHouse on the Brink of Administration, Reports Suggest

Share:

Published:

The rent-to-own retail company BrightHouse is on the brink of entering administration, according to reports.

As many as 2,400 jobs could be put at risk if the company does enter insolvency, which is now understood to be likely at some point in the next few weeks.

Sky News is reporting that insolvency practitioners have been put on standby to step in and handle the situation if administration becomes unavoidable.

BrightHouse has been faced with a worsening financial situation in recent years, with the Financial Conduct Authority (FCA) having introduced rules that put a cap on the prices it was legally allowed to charge its customers for certain services.

The regulatory measures that have impacted BrightHouse’s profits were part of what the FCA presented as a clamp down on high cost credit and an effort to better protect vulnerable people from problem debt situations.

Another major problem facing the rent-to-own retailer has been a surge in claims for compensation made against it by consumers who feel they haven’t been treated fairly by the company.

Other providers of high cost credit, including Wonga and QuickQuid, have fallen into administration in recent years, partly as a result of a deluge of compensation claims.

Those claims are estimated to be costing BrightHouse’s owners in region of £1 million every month.

BrightHouse has around 240 stores across the UK, with its business model based on providing loans to customers so they can go home with domestic and electrical goods that they then pay off along with added interest. 

The FCA’s price cap, which was introduced in 2019, has meant that rent-to-own service providers like BrightHouse can no longer charge their customers any more than double the amounts of money they initially borrow.

According to Sky News, insolvency is not yet inevitable for the company but has become a likely potential outcome.

A spokesperson for BrightHouse said: “We have disclosed a contingent liability with respect to the uncertainty around the future volume of claims and the potential outcome of the test case under discussion with the Financial Ombudsman Service.

“The level of redress claims from customers is putting increasing pressure on the available liquidity in the group.”

Contact the RBR Team Today


Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY
Dots
Free download

Free Insolvency Report

Claim Your Free Business Review

Simply search your Limited Company Name or Company Number

Next Steps

We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.