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They are widely seen as the worst type of credit

A Treasury source said: “You can expect a number of measures as part of a long-term plan to tackle problem debt and ensure all families have access to the financial services they need.”

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payday loans are more damaging to our health than any other form of credit, according to a recent report. They are widely seen as the worst type of credit, ahead of unauthorised overdrafts.

Nearly 11,000 complaints were made about payday loans between April and June this year – a 251 per cent rise on the 3,126 filed to the Financial Ombudsman Service in the same period the previous year.

In May, the city watchdog - the Financial Conduct Authority - promised to cap interest rates on rent-to-own loans, after a cap on payday loans in 2015 halved the number of people with problem debts.

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While experts have warned that millions are trapped in spirals of debt due to other high cost credit, such as doorstep loans.

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