Doorstep lenders face inquiry

Doorstep lenders - which can charge interest rates of more than 170% a year - could be subjected to a full-blown competition investigation by the end of the year.

The Office of Fair Trading said it was starting a five-week consultation with the home credit industry before deciding whether to refer it to the Competition Commission.

It would be the first time that a case has been referred following a "super complaint" - from the National Consumer Council in June.

John Vickers, chairman of the OFT, said: "Our analysis of the NCC super-complaint has identified questions about the effectiveness of competition."

The OFT said 70% of the market was held by Provident Financial, Cattles, London & Scottish and S&U. It was concerned that customers were in a poor bargaining position; step-up and roll-over loans tied them to existing lenders; agents' relationships with customers might make borrowers unlikely to switch lenders; and new entrants might be discouraged from setting up home credit businesses.