Competition Commission warns on door step lending

The Competition Commission (CC) has warned people on the lookout for an unsecured loan that they will be paying over the odds if they choose to sign up with a doorstep lender.

In its latest report on the industry, the CC said that home credit customers appear "generally happy" with the product they receive, but that it comes at a "high price".

Doorstep creditors supply unsecured loans with repayments due either once a week or once a fortnight, with interest rates of typically more than 100 per cent.

Most users are on low incomes and will struggle to find secured or unsecured loans from any other provider.

"The home credit industry seems to us to provide a service which meets its customers' requirements," CC acting chairman, Peter Freeman told This is Money.

"Various factors, however, appear to point towards a lack of effective competition which may mean that home credit customers pay more than they should."

The CC is now considering its findings and could move to break up companies operating in the sector or act to break up any regional stranglehold after it reports in January.

The National Consumer Council (NCC) said that it was pleased with what it described as an "extremely positive and encouraging" update.

"We are particularly pleased at the consumer-focused approach of this inquiry," said NCC deputy director of policy, Claire Whyley.

"We hope it will lead to practical action and a fairer deal for Britain's two million poorest people who use home credit to make ends meet.

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