The government has been urged to get tough on 'loan sharks' who prey on the most vulnerable members of the public.

The Commons Treasury committee said in a report on Thursday that the activities of illegal and unlicensed lenders represented "real causes for concern".

Committee chairman John McFall said the recent collapse of the Farepak Christmas savings club highlighted the need to act.

He called for "affordable" credit and savings to be made more accessible to the most in need.

"Many of the financial services that most people take for granted are either not available to many of the most vulnerable in our society, or are only available at a premium," McFall said.

"The burden of debt blights the lives of far too many people in our society."

The committee said the poor ended up paying proportionally more for their money than the rest of society.

And a coherent strategy was needed to promote financial inclusion - a key element in the fight against poverty.

Its report called on the government to bring forward legislation to expand credit unions.

These are financial co-operatives owned by their members, which increase their ability to borrow and reduce costs.

The report said: "The first priority area for action if the government strategy on financial inclusion is to punch its weight is in improving access to affordable credit.

"We also expect the government to galvanise enforcement action against illegal lenders by stressing the high priority which it attaches to this matter."