NCC plans to investigate 'doorstep lending'
07 November 2003
The National Consumer Council (NCC) has announced plans to investigate the practice of doorstep lending.
The group proposes to explore whether doorstep lenders charge extortionate rates of interest to people on low incomes and whether people are offered enough choice when borrowing money.
The NCC will complete its investigation before deciding whether or not to make a super complaint to the Office of Fair Trading (OFT). The report is expected in March next year.
Super complaints can be lodged with the OFT by certain organisations if they think an aspect of a market is significantly harming consumers' interests.
There are around 600 companies which are licensed to offer doorstep lending, but four national companies dominate the market: Provident Financial, Cattles, S&U and London Scottish Bank.
However, the NCC pointed out that, despite charging average annual interest rates of 177 per cent, rising to 2,000 per cent in some cases, doorstep lenders had a 90 per cent satisfaction rate with their customers.
The NCC said people liked the convenience of the system and the friendliness of the lenders.
The organisation's research will look at what other forms of credit are available to people on low incomes and if it is possible for consumers to switch between lenders and whether charges are kept consistently high.