Payday lenders warned they may lose their licences

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:

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Clamp down on payday lenders

Britain's biggest payday lenders have been threatened with being put out of business after a damning report by the Office of Fair Trading uncovered evidence of "widespread irresponsible lending".