It said that the average customer pays £25 too much for a loan, which is equivalent to £9 per £100 borrowed.
Home credit lending is carried out by agents who call to a person’s home, offering them unsecured loans at an average of a few hundred pounds in value.
Peter Freeman, chairman of the Competition Commission, told the Daily Telegraph said that this method of lending often suited customers’ needs, but that they “are paying too much for it”.
Competition in this market is weak as it is difficult for customers to keep track of price changes and it is also hard for them to compare the prices of different lenders.
Furthermore, other credit sources, such as banks, have little impact on home credit rates.
Mr Freeman concluded by saying that the commission would work on the sector in order to increase competition.