FCA publishes final rules on Rent-To-Own price cap

On 5 March 2019, the Financial Conduct Authority (“FCA”) published its final rules on a price cap for the rent-to-own (“RTO”) market (PS19/6).

The rules follow a consultation launched in November 2018 (CP18/35) and introduce a price cap for firms offering household goods on hire-purchase and/or conditional sale. The price cap rules:

  • Limit the total cost of credit to 100% of the price of the goods;
  • Require firms to bench mark the “cash price” of the goods against retail prices; and
  • Prohibit firms increasing the cost of other products sold with RTO, such as theft and accidental damage cover, to recoup the lost revenue from the credit cap.

The rules come into force on 1 April 2019 through an amendment to CONC (the introduction of CONC 5B).

The FCA will review the effectiveness of the rules from April 2020.

The Policy Statement with the final rules can be read here: PS19/6