The Public Accounts Committee (PAC) has criticised the Treasury for its lack of control over bank lending.
Changes are needed in the Treasury's powers to implement part-nationalised banks lending commitments that are introduced in return for taxpayer support, according to the committee.
"The Treasury does not seem to know why the banks are not lending and had few sanctions available to make them change their minds," PAC committee chairman Edward Leigh said.
Effective and enforceable sanctions need to be introduced before new commitments are drawn up this year, the committee's report outlines.
Last year, Lloyds and Royal Bank of Scotland (RBS) agreed to lend an extra £39 billion to businesses and homeowners. However it currently not meeting the legally binding business lending targets, leading to the PAC's recent announcement.
Another factor that led to the criticism was the Treasury's failure to let the committee know of an £18 billion insurance given to the Bank of England because of potential losses on support to HBOS and RBS for over a year after the financial crisis.
The approach of the Department for Business, Innovation and Skills to debt advice was also slammed by the PAC, who called it unnecessarily complex.
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