The National Consumer Council (NCC) has renewed call for an overhaul in the UK’s £2 billion home credit market so as to protect vulnerable sections of the society. The consumer group today said that it wanted doorstep lending to be made fairer and more competitive. It felt that such a step would go a long way in helping those who depended on this market to make their ends meet.
The group came down heavily on the commission charged by agents and said that doorstep lenders should be forced to stop paying this commission to the agents. It also urged a Competition Commission inquiry to institute better basic salaries to the agents so they are not heavily dependant on commission payments.
The Competition Commission inquiry is looking into the supposed lack of competition in the home credit market, which is currently dominated by a small number of companies.
NCC chief executive Ed Mayo addressed the Open House debate and 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."
"A ban on roll-over loans with the same provider, alongside other key reforms to the agent-customer relationship could go a long way to injecting more competition to benefit customers," he added.
The NCC argues that since there are no independent checks on what goes on between a customer and an agent, unfair practices are rampant in this segment. “We’re asking the Competition Commission to look at ways of regulating the customer-agent relationship - with a code of practice for the entire home credit industry, for instance - and changing the way agents are paid,” Mr. Mayo says.
Currently, 70% of the £2bn market is in the hands of four major providers, leaving no room for healthy competition. The Competition Commission is expected to table its report later this year.
Posted
on : Sat, 21 May 2005 14:10 GMT | Loans News
By : Chris Rowe
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