The consumer watchdog has accused payday loan companies of "irresponsible lending", "pressure tactics" and other bad practices.
The OFT has given them them 12 weeks to prove they provide an important service, or else they could face closure.
However, there will be no cap on interest rates.
Consumer Editor Chris Choi reports:
More top news
A much improved day across the UK. Rain spreads in through this evening and overnight with the heaviest bursts across western Scotland.
Risk of localised flooding across some western areas with snow melt/heavy rain.
The US government shutdown has entered its third day as the Senate deadlock continues.