Payday lenders and quick finance companies are expected to campaign for more clients over the next 12 months before an unscrupulous crackdown on lending, a lawmaker said last night. The warning came as new figures revealed that around 1.5 million people had taken out short-term loans – some at over 1,000 percent interest – to get through a recession-ravaged Christmas.

In a survey by Which ?, 92% of respondents agreed that people feel pressured to overspend on Christmas, and almost a quarter (22%) said they could afford to pay for Christmas only. using credit cards and overdrafts. So it’s no surprise that payday loan companies, pawn shops, and other cash stores have been able to cash in.

Parliament has approved laws allowing the new Financial Conduct Authority to protect consumers from sky-high interest rates, but the FCA will only take over market regulation in 2014. In the meantime, consumers – including a growing numbers of average workers – will remain vulnerable, says Stella Creasy, Labor MP for Walthamstow.

The Office of Fair Trading (OFT) could help fill the void when it issues compliance guidelines for payday loan companies next month, she added, but upcoming cuts and stagnant wages should make people’s problems worse.

“If the OFT states what it considers irresponsible, it will help the FCA to better enforce this,” said Ms. Creasy, who led the campaign to end the legal loan sharking. “But this is the time of crisis. I told people in my constituency, ‘If we can get through 2013, everything will be fine.’ “

Activists are pressuring the government to set a limit on the amount to be repaid on loans, to prevent people from being trapped in a cycle of debt. Surprisingly, perhaps, research has shown that 80% of payday loans are for staples such as food and utilities, and 30% of those who take them out are earning between £ 30,000 and £ 50,000. .

“A lot of people who get payday loans have bank accounts. It’s not a wealth crisis, people are just getting money to buy a Nintendo for the kids,” Ms. Creasy said. “It’s a needs crisis. People need money to eat. They borrow because people are trying to keep their homes.”

Research by whom? found that 46% of people used credit cards, overdrafts, bank cards or loans to cover their party expenses, while 36% dipped into their savings, taking £ 380, on average, to cover their bills.

The Consumer Finance Association, which represents many major lenders, admitted last night there was a problem, but said a new code of conduct introduced last month, including increased fee transparency and better rules on affordability, would help. A spokesperson said: “Our members have put a lot of effort and expense into introducing the code of practice, which we hope will make a difference.”

A spokesperson for StepChange, which offers free debt advice, said the use of Christmas loans “reflects what we see among the thousands of people who come to our help with debt each week.”

He said: “Household budgets have been squeezed by a series of pressures, such as wage freezes and inflation, as many are now at breaking point.”