There has been growth in the direct loansmarket for the third consecutive month, with new business in January up 27 per cent compared with January last year, according to the latest market figures from the Finance and Leasing Association (FLA).

Consumer credit lending increased in total by five percent in January, which represents the first overall rise since August.

There was also a 16 per cent rise in the car finance market, while credit card borrowing rose by 3 per cent. However despite these increases, high Street credit continued to fall as consumer confidence remains low, with store card spending shrinking by 18 per cent and store instalment credit down by 11 per cent compared with January 2010.

Fiona Hoyle, FLA Head of Consumer Finance, said: "In the last twelve months our members provided over £50 billion of consumer credit, but consumer confidence remains low. A sustained economic recovery is dependent on a competitive market that creates more choice for consumers. It is important that any changes to the regulatory regime for credit markets, under a new Financial Conduct Authority, do not impede this growth."