Finance news from Loans Park

London (loans-park) May 12, 2006: Lack of competition in the home credit market is causing borrowers to be overcharged £100m. The Competition Commission revealed that customers approximately pay 9% more for loans from doorstep lenders.

It asked lenders to supply better information on prices and share information with other lenders to make it easier for customers to shop around and avail a befitting loan. Competition Commission also warned lenders that it may impose price caps if these solutions were unsuccessful.

Competition Commission Chairman Peter Freeman said "Customers value home credit because it suits their needs very well but the fact is that they are paying too much for it, because of the lack of competitive pressure in the market."

Price war between the existing lenders is feeble, partly because customers seem insensitive to prices as they place higher value on factors such as the convenience of the loan and the difficulty in comparing prices between companies.

The Competition Commission report also threw light on the fact that over the past five years, there had hardly been any reduction in charges, as a result of that lenders are making £500m in excess profits.

A complaint lodged by National Consumer Council (NCC) led to this investigation.