Doorstep lenders are to come under the investigative spotlight of the Competition Commission, as it looks at their selling techniques.
The investigation will centre on whether sellers of home credit are too over-zealous in their approach.
It will try to determine whether the financially vulnerable customers feel pressured into signing up for a loan.
The investigation follows a super-complaint from the National Consumer Council last June.
The Competition Commission will also want to find out whether agents are discouraged from suggesting that reliable customers switch to cheaper loans offered by the same company.
When outstanding debts are factored in, the UK home credit market is valued at £2 billion.
However, at present four firms control nearly 70 per cent of the market.
Home credit lenders typically offer small cash loans, which are then repaid on a weekly or fortnightly basis, with the collectors visiting the customer's home.
The Commission wants to see whether borrowers are given the opportunity to make comparisons between the home credit loan on offer and other forms of borrowing.
Last year, the Office of Fair Trading said there were "reasonable grounds" to suspect that areas of the market restricted competition.
The Commission hopes to publish its findings by the end of the year.
Watchdog to probe home credit services
Watchdog to probe home credit services
Mon, 18 Apr 2005
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