CARMARTHENSHIRE consumers who use Rent to Own schemes to purchase new household items could soon have greater protections, says MP Jonathan Edwards who is currently co-sponsoring a Parliamentary Inquiry into rent to own credit agreements.

Rent to Own (RTO) stores have become an increasingly common sight on high streets in recent years, particularly in less affluent areas. They are also very common online with many households purchasing goods via a payment box on their television.

Rent to Own schemes specialise in household white goods, electronic items, and furniture. The business model is broadly hire purchase – the customer has a credit agreement with the firm but does not own the goods outright until the last payment is made.

RTO customers typically pay weekly or monthly instalments, spreading payments over a long period of time – usually two or three years. The ability to spread payments is valuable for people on low incomes who are unable to access more mainstream credit, for example a credit card or overdraft.

StepChange Debt Charity estimates that the largest three rent to own firms have a combined customer base of at least 350,000 households.

Member of Parliament Jonathan Edwards was the former Head of Policy for Citizens Advice Cymru before being elected to Westminster and said he was acutely aware of the problems this type of arrangement can bring. As a member of the Parliamentary group on Debt and Personal Finance, Mr Edwards is one of just four of Westminster’s 650 MPs co-sponsoring an inquiry into rent to own credit agreements.

The inquiry held its first evidence session last week, where Jonathan Edwards took evidence from the Financial Conduct Authority, the Centre for Responsible Credit, three major rent to own companies and charities and credit unions associated with assisting with bad credit.

Jonathan Edwards says he believes there is a need to strengthen legislation to protect those who undertake rent to own agreements. Speaking after the meeting in Parliament, the Plaid Cymru MP said: “There is absolutely no shame in anybody using a rent to own agreement for household items.

“But just because somebody is unable to pay in full, or doesn’t have access to a credit card or overdraft to make a purchase, there is no reason for them to face extortionate additional costs or what can be unfair practices that force up the cost of their items.

“During our inquiry session I heard a range of views from those who offer rent to own contracts, those who have suffered as a result of them and those who have assisted people with credit difficulties.

“I think there is scope to change the law and ensure greater protection for consumers who depend on rent to own agreements – particularly in respect of additional costs which are often added to the bill – and I look forward to taking the necessary changes through the Parliamentary process.”