People are 'increasingly having to turn to lenders'
Margaret Hodge, chairwoman of the Public Accounts Committee said consumers are "increasingly having to turn to lenders" as money gets tighter and banks are lending less.
She added that some lenders are using "predatory techniques" to target vulnerable people. She said:
Such disgraceful practices by the shabby end of the credit market are costing borrowers an estimated £450 million or more each year.
Meanwhile, the Office of Fair Trading, the regulator of this sector, has been ineffective and timid in the extreme. It passively waits for complaints from consumers before acting. It has never given a fine to any of the 72,000 firms in this market and very rarely revokes a company's licence.
It doesn't understand the market - how much each firm lends and who its customers are - and can't be certain if directors of companies that have run into trouble are now running other companies.
MPs: OFT is 'ineffective and timid in the extreme'
A damning report from a committee of MPs has accused regulators of failing to get to grips with "predatory" lenders who leave vulnerable customers struggling with spiralling debts.
The Public Accounts Committee said the "shabby end" of the credit market was costing borrowers £450 million a year, but that the Office of Fair Trading (OFT) had not taken the tough action needed to protect consumers.
The OFT had been "ineffective and timid in the extreme", committee chairwoman Margaret Hodge said.
The regulator insisted it had taken "strong, targeted action" to protect consumers but was constrained in what it could do by the existing legislation.
OFT: Parents and children subject to 'unfair pressure'
The OFT said they are concerned that children and parents are subject to "unfair pressure" to purchase, when playing on web or app based games, which can lead to "substantial costs".
The OFT is not seeking to ban in-game purchases, but the games industry must ensure it is complying with the relevant regulations so that children are protected. We are speaking to the industry and will take enforcement action if necessary.
– Cavendish Elithorn, OFT senior director for goods and consumer
Unite: New payday loan rules 'do not go far enough'
The Government's new rules do not go far enough to properly regulate payday loans. The toxic combination of shrinking wages and rising costs is drawing more people into the clutches of these legal loan sharks.
The Government must cap the extortionate interest rates that payday lenders charge to help stop desperate borrowers falling into a spiral of debt. There also needs to be new rules to rein in these lenders' aggressive collection methods.
Controlling how much legal loan sharks are allowed to advertise is not good enough. They shouldn't be allowed to advertise on TV at all, nor should they be allowed to sponsor large events or football teams which can end up being associated with companies that exploit local communities.
From April, more people will be likely to turn to payday lenders as the Government scraps the Social Fund which was there to help with living costs for people struggling on benefits.