Door to door lenders who prey on vulnerable people in need of a
quick source of cash are to be investigated by the Competition
Commission, writes Shirley Kumar.
The Office of Fair Trading referred the supply of home credit to
the commission for further investigation following a complaint by
the National Consumer Council (NCC).
The NCC and campaigners Debt on our Doorstep (Dood) complained
to the OFT in June that more than 40 per cent of home credit
customers had a long term illness, disability, or were caring for
someone who was sick or disabled.
“We are confident that once the true scale of the problem
is revealed, the veer of respectability that these companies have
so far maintained will soon start to crack”, said Dood
chairman Chris Gibbons.
More than half of current or recent home credit customers were
on incomes less than £9,500.
70 per cent of the door to door lending market was run by four
firms although there are 500 firms tradin in the UK, found the
The Office of Fair Trading said a lack of competition was
leaving the poorest people with little bargaining power and
vulnerable to high priced loans that are difficult to break away
Annual percentage rates ranged from 164.08 per cent to 903.13
And most customers found it difficult to switch lenders because
of high penalty rates.
To put people into deeper debt, lenders offered step-up loans or
The OFT said outstanding national debt was valued at £2
billon and five per cent of adults had taken out a home credit loan
in the past year.
Gibbons urged all credit unions, church groups, community
associations and advice agencies to make a submission to the
commission’s inquiry by the 21 January deadline.