27 October 2005
Home credit - which sees repayments on personal loans collected from a customer's place of residence - comes at a price, the Competition Commission has said.
The commission commented that customers are generally happy with the services that home credit provides, but that the market itself may be uncompetitive and customers could be paying unduly high costs as a result.
Last December the OFT referred the home credit industry to the commission in a bid to discover whether it was acting fairly towards its customers – many of whom are targeted by door-to-door lenders and have low incomes or poor credit histories.
Peter Freeman, acting chairman of the commission, said that the industry undoubtedly provided a convenient and acceptable service for its customers but may not be giving them the fairest of deals.
He said: "The home credit industry seems to us to provide a service which meets its customers' requirements.
"Various factors, however, appear to point towards a lack of effective competition which may mean that home credit customers pay more than they should."
One of the biggest home credit lenders in the UK is Provident Financial, which controls around half of the market. It typically delivers small, unsecured loans of between £50 and £500 to a customer's door, with a fixed charge incurred for using the service.
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