Shadow Treasury financial secretary Chris Leslie says regulation of payday loans should be handed to the Financial Conduct Authority.
Speaking at a fringe meeting on debt at the Labour party conference yesterday, Leslie said he would give the FCA the power to limit the interest rate and duration of loans.
He said: “There are campaigns about legal loan sharks and we believe it is necessary to put it on the face on the Financial Services Bill.
“The FCA should have responsibility to protect the consumer against detriment but also power over the total cost of the loan and the duration of high cost credit could be made available for vulnerable individuals.
“One of the things that worries me as much as the total cost is the rolling over of some of those provisions from month to month. It is one of the areas we do need to deal with in the reform process. There are also things to do around debt management plans too because of some of the debt management sharks have fee-charging arrangements.”
At the Liberal Democrat conference in Brighton last week, deputy chief whip Lord Dick Newby said the Government is poised to regulate the sector if it does not quickly introduce a code of conduct.