Call to ban long-term doorstep lending deals
Herpreet Kaur Grewal,
Regeneration & Renewal magazine
Commission payments for doorstep lending agents should be banned to stop ‘hard sales’ techniques being used to persuade people on low-incomes to take out loans they cannot afford, a consumer group said last week.
The National Consumer Council (NCC) told a Competition Commission inquiry into the home credit industry that it wants to see changes to the way the industry’s agents are paid and a ban on ‘roll-over’ loans, which lock customers into expensive home credit deals through which they pay interest on interest.
NCC chief executive Ed Mayo said: ‘There is no reason why low-income consumers should put up with less competition and lower standards than everybody else. Agents may be the friendly face of home credit companies, but in the unique setting of the home, consumers are also vulnerable to approaches that lock them into a long-term borrowing relationship with one home credit provider.’
Niall Cooper, national coordinator of campaign group Church Action on Poverty, said that the ‘immediacy of the offer of an up-front cash loan on your own doorstep’ is often a tempting option for people on low-incomes who are struggling to get by from week to week.
Home credit companies, such as Provident Financial, London Scottish, S&U and Cattles, defended themselves at the evidence-gathering session against claims that they exploit their dominant position in the marketplace.
A Provident Financial spokeswoman told Regeneration & Renewal: ‘We will continue to offer our full support to the Competition Commission. We believe we can demonstrate the competitive nature of the market for the supply of small sum credit.’
The inquiry comes after a Consumer Credit Bill was introduced in the Queen’s Speech last week
The inquiry group plans to publish its provisional findings before the end of the year.