Parts of the credit market are 'opaque and poorly regulated' and require urgent attention, the Government has been told.
A report by a group of MPs has set out a number of regulations to better protect consumers from debt, payday lending and debt management companies.
A consultation on the industry ended almost a year ago but 'little has been done to remedy the situation', said the Business, Innovation and Skills Committee (BIS).
It added that parts of payday lending and debt management were 'opaque and poorly regulated'.
David Cameron was questioned on his commitment to dealing with the problems during Prime Minister's Questions today, although he assured the house of the ongoing efforts to better regulate the industries and help households with debt.
On payday loans, the group of MPs has said that the Government must limit the 'rolling over' of loans and the issue of people taking numerous loans from different companies.
It also asked that all transactions carried out by payday lenders be recorded on a database.
"Payday loans, by their very nature, appeal to those in serious financial need, some of whom will have low levels of financial literacy," said the chairman of the BIS, Adrian Bailey MP. "We must be certain that this industry adheres to the highest standards - either through the codes of practice that are currently being developed or, failing that, by the new regulator. "Consumers must have a clear idea of the cost of this form of credit and of the realities and penalties of late payment."
Addressing debt management companies, the committee said that up-front fees charged to people looking for help out of debt should be passed out, and that firms should make clear the cost of their advice.
"Greater transparency in the commercial debt advice market will benefit consumers hugely," added Mr Bailey. "The Committee feels that voluntary codes of practice are highly unlikely to achieve this aim. "The Government must be prepared to regulate if consumers are to receive the protection and the level of information they require."
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