Capping payday loan rates was a mistake, said the report, as doing so would force people to go to loan sharks.
The Financial Conduct Authority earlier this month said payday loan rates should be capped at 0.8% a day, meaning a £100 loan for a month would cost £24.
The report was led by former Labour minister Chris Pond.
The Centre for Social Justice was founded by Work and Pensions Secretary Iain Duncan Smith in 2004.