The Government has been urged by one of the UK's biggest consumer groups to immediately clean-up the credit marketplace.
Which? said that with mainstream loans less widely available, the market for high-cost credit, which is less tightly regulated, has grown rapidly. Payday loans particular concern Which? after its recent survey showed that 24 per cent of people with such a loan use it to meet repayments on other loans, such as for cars or mortgages.
"For an increasing number of people, using credit to pay for essentials has become the norm. This has led to people being forced into a vicious cycle, taking out further, expensive credit to pay off existing debts. The new regulator [Financial Conduct Authority due to come into being later this year] must be strong, proactive and willing to take action, especially against lenders who are exploiting consumers."
Which? said the FCA should ban excessive default charges and fees, ensure lending is done responsibly, end unsolicited credit offers and ensure sales information is clear and transparent. The call comes as debt charity Stepchange revealed it has taken 20,000 calls in the past 12 months relating to payday loan debt, up 94 per cent in a year.
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