There have been calls from MPs for the OFT (and in due course the new FCA) to do more to protect the public from pay day and door-to-door loan lenders.   A staggering 2 million people are customers of pay day loan companies alone.  This is a figure that affects us all.

As the UK’s financial crisis deepened so a much wider pool of people became reliant on short term finance outside the main market of credit cards and bank loans. These people are employees, fathers, mothers, sons and daughters. You may, unknowingly, know a pay day loan customer.

On the one hand the OFT says its constrained by a lack of powers. On the other, the Public Accounts committee confirms not one of the 72000 firms believed to be operating in this market has been fined. Although the OFT found “widespread irresponsible lending” within the top 50 companies in the sector only three are being investigated, with another  5 no longer trading for one reason or another.

The Public Accounts committee is seeking tighter regulation before 2014 when the FCA takes over some of the OFTS responsibilities. MPs want decisive action and are calling for a range of new measures to be introduced to protect consumers.  These include the abolition of APR.  It’s believed a total amount payable would be easier to understand. MPs also want a limit on the amount of rolled over interest payable.

Underlying all this is widespread belief the sector lends to be people without sufficient checks on affordability. Even more damming is the suggestion from Citizens Advice that it lends to people under -18 or with mental health issues.

If anyone ever doubted the problems caused by pay day and door to door lenders, the National Debtline says the number of calls it’s taken about pay day loans has spiralled from 425 in 2007 to more than 20000 calls in 2012.

These figures are one reason why Citizens Advice says the sector is out of control. What is perhaps striking is the way in which the OFT has successfully reigned in poor practice in other sectors where a Code of Conduct also proved ineffective.

It remains to be seen what will happen to tighten regulation of the pay day loan sector. But employers and colleagues and family members need to be attuned to the impact financial pressure can have on performance and wellbeing.