The practice of doorstep lending, where local agents offer loans to people in their own homes at high annual percentage rates, is to come under scrutiny from the Competition Commission.

The Commission is to consider whether the companies that dominate the doorstep lending market, worth £2 billion a year, are unfairly persuading vulnerable people with limited financial knowledge to take out extra loans.

Lenders including Provident Financial, Cattles, S&U; and London & Scottish Bank head a number of organisations that employ the agents, mostly middle-aged women, to doorstep customers in the poorest communities, offering rates that average of 177 per cent but can reach as high as 900 per cent.

The Competition Commission’s investigation follows a ‘super-complaint’ about the practice of doorstep lending by the National Consumer Council last June.

A series of hearings will allow the Commission to consider whether the lenders exploit vulnerable people with low levels of financial literacy and generate excessive profits.

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