Shadow Treasury financial secretary Chris Leslie has called on the Financial Conduct Authority to regulate payday loans.
Speaking at a fringe meeting on debt at the Labour party conference last week, Leslie said the FCA should have 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 to protect 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.”
At the Liberal Democrat conference in Brighton last month, deputy chief whip Lord Dick Newby said the Government is poised to regulate the sector if it does not act quickly to introduce a code of conduct.