WA52

Home credit market to be investigated

The Office of Fair Trading has announced that some features of the home credit market may be uncompetitive, and should be investigated by the Competition Commission.

The announcement comes as a response to a complaint made by the National Consumer Council, which has warned that many home credit customers are in a poor bargaining position, cannot easily shop around and risk getting into a spiral of debt.

Home credit lenders typically sell through agents who call at customers' homes offering unsecured cash loans of, for example, £200 to £300.

About 500 firms are involved in home credit, but four firms account for almost 70 percent of the market and, according to the OFT, the nature of the business deters large new entrants.

However, the watchdog said it would consult with the industry to give it a chance to respond to its concerns before deciding whether to recommend investigation by the Competition Commission by the end of this year.

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