The House of Commons has voted against proposals to impose a cap on the interest rates charged by "high-cost" credit providers such as short-term or payday lenders.

The verdict follows a debate in Parliament yesterday where MPs considered whether to implement the move as an amendment to Clause 11 of the Finance Bill.

It followed concerns raised by some MPs that tightening of lending terms by banks had led to a rise in the demand for alternative credit sources, which was creating detriment for consumers which incurred spiralling debt problems as a result of not being able to keep up repayments on high-cost loans.

During the debate Neil Parish, Conservative MP for Tiverton and Honiton, categorised many of these alternative credit providers as doorstep lenders, and asked ministers what they intended to do to address the issue.

He said: "I would like to hear exactly what they (Ministers) plan to do about doorstep lending. These companies – I call them loan sharks to be blunt – travel around our poorest areas…and I think that Members on both sides of the house are concerned about what action we should take."

But Mark Hoban, financial secretary to the Treasury, argued against capping the interest rate charged by alternative lenders, and told Parliament that the high-cost credit market provided a service for those who could not obtain credit from any....Read more on this story: Credit Today online