The growth of the payday loan and ‘debt management’ industries could be masking the full extent of the personal debt crisis in the UK, accountancy firm Wilkins Kennedy warned.

Insolvencies in England and Wales were down by 7% last year from 2012, while bankruptcies were down by 22.8%.

But Wilkins Kennedy argue that those taking payday loans are not being caught by the figures.

Louise Brittain, insolvency partner at Wilkins Kennedy, said: “We know that massive and highly targeted marketing campaigns are attracting more and more individuals into using Debt Management Plans and Pay Day loans as ways to manage their debts.

“In many cases the arrangements are rolled over from one month to the next, and because of the punitive interest or high, front-loaded fees, very little capital is repaid and the individual’s financial difficulties get worse, not better.”