The coalition have not made a statement about it yet, but with interest rates so low I would have not expected anything to have been said as it does not affect the masses. The previous Conservative had spoken out against such reform, and Labour made a pathetic comment but that was it. There is never an acceptable reason for any rates higher than 50% for any creditor. If the banks feel that the debtor is such a risk that 50% rates are applicable then they should not be lending to people that risky.

A 50% annual rate will not provide a sufficient return over a short period of time.

Rubbish. I used to do treasury for a trader up to £3 million a night, and usually a lot less. I made fractions of a percent per night and still made a fortune for my employer. Don't forget that once repaid that money can be loaned to someone else. An interest rate of the figures you quoted are considered usury and illegal in many parts of the world. In Pakistan and India families have to sell their children into slavery to clear their debts to money lenders.

That may well be, but in the UK as long as you're licensed by the OFT then you can lend money.

Also, we're not talking about £3 million, we're talking of amount of no more than about £1,000 for no more than a few weeks. £1000 borrowed over 3 weeks with an annual interest rate of 50% gives a pre-tax return of just £28.80.

And all without getting out of bed. When interest rates are as low as 0.25% we are discussing a rate of interest two hundred times higher. A cap only becomes a problem when inflation is high but we are not at that point yet.

If you don't like the rate then don't borrow. There are rules in place to stop predatory lending, and if you ban these "Pay Day" loan providers then you're just forcing people into the arms of loan sharks and criminals.

The fact that pay day loans even have a market is a serious sign of problems building. The rates demanded by these companies are no different from loan sharks and criminals.