The regulators who failed to stop Wonga's disgraceful practice have just as much of a case to answer as this nasty payday lender

Sometimes you come across a business which is more stupid than evil, though the latter word too easily falls to mind in the case of Wonga, the payday lender. Even by the debauched standards of its line of work, threatening customers using non-existent firms of lawyers was a peculiarly nasty manoeuvre. It was so pernicious because it would have frightened many already in debt into borrowing more just to get themselves out of a hole, and thus landing themselves – needlessly – in even more trouble. Someone at the top of Wonga was either too dense to stop that happening, or complicit in it. Labour’s call for a police investigation is entirely justified.

Baleful though the behaviour of Wonga is, it is not so regrettable as the failure of the regulators to notice what was going on. “Asleep at the wheel” may be a cliché, but it fits the record of the Office of Fair Trading, which was aware of this problem for some time before action was taken.

One problem with the payday lenders is that they are simply too good at what they do. People can access instant money from their smartphone as they stroll from the bookies to the pub on a Saturday afternoon, neatly encompassing three great British vices – gambling, borrowing and boozing – in one short journey.

It is probably true, on the law of averages, that some people who use Wonga would otherwise use less safe sources of funds, and that some sections of society – not always the poorest – are so hopeless with managing their money that some form of unorthodox lender will always be required. However, it is also true that our epidemic of debt is a sign that some people too willingly live beyond their means, even when those means are adequate to sustain a modest standard of living, and the new technologies showcased at Wonga have exacerbated the trend. There is a stratum of society that, before Wonga, would have stayed in for a night instead of going out because the cash wasn’t there. For them, Wonga and its peers may be a gateway to a world of debt.

Contrast Wonga and its compatriots with the competition. The modern-day pawnbrokers and cheque-cashing shops are primitive by comparison. The credit unions, now much favoured by the leadership of the Church of England, are also chained to their physical premises and conventional opening hours, and no doubt too cautious for some lending that Wonga takes on. The mainstream banks and building societies can arrange an overdraft in seconds, but, since the authorities required them to stop riskier lending, they only lend to people who don’t need the money, as the old saying goes.

Banning payday loans, or capping their interest rate in a medieval tradition of usury, would have the obvious effect of driving the emergency loan business into less scrupulous hands, perhaps beyond our shores and the reach of the regulators, and underground, where physical brutality is the favoured method of enforcement. That is not the answer. If the Church of England, the charities or the Government are serious about putting the payday lenders out of business, they need to find a way to match the sophistication and urgency of Wonga’s delivery. In the meantime, the regulators need to wake up – and grow up, too.