This cap on ‘rent to own’ companies such as Brighthouse will save people millions of pounds and follows a campaign by Doncaster MP Ed Miliband.
The cap on amounts of interest charged, is now in place, to effectively help protect members of the public from being ‘ripped off’.
Introduced by the Financial Conduct Authority, it follows a successful local campaign involving Community First Credit Union and Mr Miliband.
The cap is expected to save consumers in the UK up to £22.7 million a year.
This action from the FCA is seen as vitally important protection for people who choose to use rent to own companies.
However, even with the price cap, the total price that companies like BrightHouse are allowed to charge can can still be twice the basic cost of the item being purchased.
Similar products can be bought much more reasonably through credit unions.
Chief executive of the FCA, Andrew Bailey, came to Doncaster in 2017 to see for himself the impact of the rent to own sector.
Mr Miliband said: “The Head of the Financial Conduct Authority saw for himself in Doncaster the impact of the rent to own sector on vulnerable customers.
“That evidence has led directly to the changes we are seeing which will reduce the risk of members of the public being ripped off.
“However, the point of the campaign was also to draw attention to credit unions which provide an excellent and cheaper alternative to companies in the rent to own sector.
“I would encourage anyone who needs help purchasing household goods to contact their local credit union to find out how they can help.”
People can get in touch with their local credit union by visiting the following link: https://www.communityfirstcu.co.uk/