Margo MacDonald has suggested that greater clarity is required regarding short term loans and the firms that provide the service.
The Scottish MSP has written to the Office of Fair Trading requesting that it explains the laws concerning payday lending.
She also questioned whether short-term loan companies give customer a cooling off period of two weeks in which they can cancel their agreement if they so wish.
Furthermore, she noted that Scottish law requires that certain contracts have to be signed in the presence of a witness and this could affect a lot of the agreements made north of the border if it was applied to the payday advance market.
In her letter, Ms McDonald said she echoed the concerns of some of her constituents, especially those with modest means, that some companies could be operating on the borderline of legality.
The OFT was established in 1973 and the SMP and her employees are looking forward to taking part in future talks with the government department on the issue. In the meantime, they are browsing the Internet to find any instant cash loan providers that are breaching the rules.
Payday loan companies have received a lot of bad press recently and yet they do perform a valuable service if used sensibly. The main point to keep in mind is that they are designed to help people out with cash emergencies and not as a means of topping up income on a monthly basis.