Stella Creasy: A cap on the cost of credit will curb the loan sharks

It's time to end the myth that there are a few bad apples and recognise that the way the entire industry works is causing problems for millions of British consumers. Legal loan sharks have been able to rack up huge profits on the back of consumers struggling with the rising cost of living and a regulator without teeth, with five years of talk resulting in no action.

This week these companies have been called in to see the Consumer Affairs minister. If I were invited to attend I would be asking them and the Government to show they are serious about tackling these problems.

I'm pleased the industry has been referred to the Competition Commission for investigation. The commission must look not just at individual companies, but also at what a lack of regulatory measures – such as a cap on the cost of credit – does to the affordability of loans.

We know such measures have made a real difference to the market in other countries. Year after year and report after report, the widespread damage they are inflicting on consumers has been laid bare and yet still the industry claims it can sort itself out.

That's why we must deal with the root cause of the problem by capping the total cost of credit and so limiting the amount any person can owe on a loan. But this investigation could take up to two years – time that British consumers cannot afford.

The Financial Conduct Authority has the power but not the data to introduce such a cap – if ministers want to show they are finally getting to grips with legal loan-sharking in Britain they should demand the industry share its data with the FCA now, so that they can set and introduce such a cap without delay.

Given the debt and misery involved for those affected by this unfair market, it is time to put the needs of British consumers first.

Stella Creasy is Labour MP for Walthamstow and a party spokesperson on home affairs