Update 30/03/2020: Bright House have brought in administrators. It seems like Bright House will eventually shut down, due to fines around mis-selling and increased complaints provisions to the tune of £17.5m. There will be no new rent-to-own or lending going forward, however if you have an agreement with Bright House this does not change and is subject to the agreed term.
Are you being harassed by Bright House Loans UK about your loan? Do you have loans you are unable to repay? Are you receiving threats such as being taken to court? Do you consider that the loan is unaffordable and you shouldn’t have been lent the money? If you are having these or other problems with Bright House Loans UK then this article is designed to help you.
Who are Bright House Loans?
Bright Loans is a product offered by BrightHouse, a lender that has been in business since 1994. The company offers short-term loans from £200 to £1,000 with a fixed term of 78 weeks. The loans are available in one of the local store outlets and once accepted, money can be deposited into their consumer’s bank account within four days. Three payments are made on a weekly basis.
1) Your best solution (if you qualify)
You can write off 75% of your debt with a new government scheme called Individual Voluntary Arrangement. You only qualify if your debts are over £1,700 and you have more than one debt. Fill out a 30 second form to see if you qualify on the Debt Information Service website.
2) Check your credit score for free
Do loan companies make it too easy to borrow money?
It is so easy to borrow money through lenders. The web is crowded with companies that are happy to advance you cash within a few minutes; to approve you for a loan of up to £1,500 in just seconds; to advance you money instantly without any credit checks. Many offer loans to people who have a “Very Bad Credit” history or who are already having difficulty repaying loans.
If Bright house Loans did not follow any of the laws below, then you could claim for a refund!
Why you might have got into debt problems and what the government is doing to curb these loan sharks
It isn’t surprising that so many people get into debt problems with these organisations. The situation today is much better than it was a few years ago. Before new regulations came into force, the loan business was spiralling out of control, as were many people’s debts. At one time the loan market was over £2 billion, fuelled by irresponsible lending and astronomically high interest rates.
Unfair practices identified by the Financial Conduct Authority resulted in huge fines being imposed on many top players. These include Wonga, fined £220 million; and others like The Money Shop being collectively fined £15.4 million; plus a £1.7 million fine for Quickquid. Where money had been lent to people that should never have received a loan because of their “limited criteria” the customers received a refund. The medicine worked. Over the three years following regulation the number of loans issued fell from 10 million to 1.8 million and the number of lenders fell from 240 to 60.
Government cap on loan interest and other charges
The Financial Conduct Authority has introduced a price cap to protect borrowers from excessive charges. These include:
- A cost cap of 0.8% per day on the amount borrowed – this includes both interest and all fees charged.
- A cap on default fees of £15 – after a default interest can still be charged, but it mustn’t exceed the original rate of 0.8% per day.
- A complete cost cap of 100% – you should never be asked to repay more than 100% of the money borrowed.
These limits apply to all credit agreements that have an interest rate of 100% or more a year and that are due to be fully or substantially repaid within a year.
Additional regulations came into force in May 2017. They now must provide details of their products on a price comparison website authorised by the FCA and borrowers must be provided with a summary of the cost of borrowing.
If Bright House Loans UK is in breach of these regulations and is attempting to charge you more than they should, your credit agreement with them is unenforceable and they will not be able to make you repay the loan.
Is Bright House Loans UK authorised?
There is no doubt that many so-called loan companies are doing business when not authorised to do so. Only authorised businesses are permitted by law to make certain credit agreements. If they are not authorised, then they cannot enforce repayments. You can simply stop paying them and they can do nothing about it.
To check whether Bright House Loans UK is authorised, just enter the name of the company on this Interim Permission Consumer Credit Register search page. You can also search the financial services register here. If they do not have a valid up to date entry on at least one of these registers, simply stop paying them. They have no power to enforce the debt.
Other indicators that Bright House Loans UK might be operating illegally include a lack of information on the company website, information on the website that is out of date or different from the information that appears on the two directories, and non-disclosure of true APR.
How to complain about Bright House Loans UK
If you believe that Bright House Loans UK is in breach of the regulations and is treating you in any way unfairly, you have the right to complain formally, and if your dispute remains unresolved or is not dealt with within eight weeks, you can to escalate your complaint to the Financial Ombudsman.
You should collect together all the evidence you have including details of any phone calls. Write to Bright House Loans UK heading your letter with the word Complaint. The more detail you can provide, the better. You should also say how you would like the matter to be resolved.
If Bright House Loans UK fails to provide you with a satisfactory conclusion, you can take your complaint to the financial ombudsman. The best way of doing to is to contact them by phone on 0800 023 4567 or 0300 123 9123
If Bright House Loans UK has treated you unfairly, you may be entitled to a refund even if you have paid off the loan within the last six years. If so, you can expect to be refunded all the interest you have paid on the loan along with any additional charges. You should also receive 8% interest on these payments.
If your loan is considered to have been unaffordable you can insist that it is removed from your credit record and that the outstanding balance is cancelled.
The first step is to write to your lender stating your case and asking for compensation.
If you do not receive satisfaction within 8 weeks you can follow it up through the Financial Ombudsman by phone on 0800 023 4567 or 0300 123 9123.
New rules regarding Continuous Payment Authority
Most loan companies will want you to repay the debt using a Continuous Payment Authority (CPA). This provides the company with permission to take any sum they wish from your bank at any time they want. They are supposed to inform you prior to debiting your bank account, but many of them fail to carry out this crucial step. The result is you don’t know the money has left your account until you see your next bank statement.
If you are struggling with important payments such as your rent, mortgage or utility bill, and the money is taken by Bright House Loans UK ahead of these bills, you could end up in serious trouble even putting your house at risk.
New regulations mean that if the CPA fails to be paid on two occasions, no further requests to your bank account are allowed.
There are also rules governing the amount of money they can take using a CPA. No longer are they allowed to take partial payments. If you don’t have enough money in your account to cover the full amount of the payment due, they can’t take anything. Only if you agree that they can take a partial payment, they are allowed to do so, but you must give your permission in advance for them to do so.
When they do make more than two requests or they take a partial payment without your explicit permission they are in breach of regulations. You can report them to the financial ombudsman on 0800 023 4567 or 0300 123 9123.
What to do if you simply can’t afford to repay the loan?
If Bright House Loans UK has operated legitimately but you simply can’t afford to repay the loan, there are some steps you can take to protect yourself.
If you are paying them by CPA, standing order or direct debit, you should contact your bank and cancel these. Bright House Loans UK will no longer be able to collect payments automatically and you will retain control of your bank account. Your bank may advise you to inform Bright House Loans UK that you have done this, but you are under no legal obligation to do so; they will be unable to collect any money from you until you give them explicit permission to do so.
Of course, you will still owe them money so you must deal with that directly; while you might be tempted to do so, don’t hide your head in the sand. Your first approach should be to contact Bright House Loans UK and talk to them about your problems. They are obliged to treat you fairly, so you should be able to come to an agreement to reschedule your repayments.
By law, lenders must:
- Indicate where you can obtain free independent debt advice
- Hold off debt recovery for a reasonable period while you develop a repayment plan possibly using a debt advisor
- Giving you reasonable time to repay possibly freezing interest and additional charges.
Don’t roll over your loan
Bright House Loans UK might suggest that you roll over the loan, but doing so is almost certainly a bad idea. You will be charged even more interest and additional charges leaving you in even deeper debt. By law loans can be rolled over no more than twice.
Getting debt help
There are several organisations that provide free independent advice on debt:
Are loan companies all sharks?
There is little doubt that loan companies receive a bad press. It can be argued that they also provide a valuable service by offering a credit line to people who would be unable to obtain credit from a bank or credit card. It is only when these companies place profits ahead of everything else and exploit their customers that they do real harm. While some sharks remain, the new regulations have made it much safer to use these companies. However, many people still get into debt problems.
If Bright House Loans UK are in breach of the regulations, then you are entitled not to pay them as the debt is unenforceable. If you simply can’t afford to pay, then contact one of the organisations we have listed above, they will provide the help and guidance you require.
If you can’t pay back your loan do check out my other article here.
John (Money Nerd)