Responding to the OFT's report into the payday loan industry today Citizens Advice calls for guilty lenders to be stopped from trading immediately.

Gillian Guy, Chief Executive at national charity Citizens Advice said:

“Payday loans are proving toxic for many people. Unscrupulous lenders are ramping up costs when customers can’t afford to repay, and are emptying bank accounts to claw back loans, leaving people without a penny to their name. What’s worrying is that these loans are often given without proper credit checks, so too many people are given loans they won’t realistically be able to pay back.

“For too long this industry has acted as a law unto itself. So it is good to see the OFT planning to remove the licences of lenders who do not improve within the 12 week deadline. But to truly protect consumers, lenders who are still found guilty of flouting guidelines must be stopped from trading straight away.

“OFT’s proposal to refer the payday loan industry to the competition commission is a vital step to force the whole industry to stop irresponsible lending and treat customers fairly."

If you have had a problem with a payday loan you can get help from your local Citizens Advice Bureaux, online at www.adviceguide.org.uk or complain about a lender to the Citizens Advice consumer service on 08454 04 05 06 or for Welsh-speaking advisers on 08454 04 05 05. If you complain to a lender and are not satisfied with their response you can make a complaint to the Financial Ombudsman Service (FOS). If the lender is a member of a trade association, you can also complain to them.

The Citizens Advice service has seen a ten-fold increase in the proportion of clients receiving help with multiple debts which included a payday loan in the last four years.

Citizens Advice recently reported four payday lenders to the OFT asking the regulator for suspend their licence immediately following evidence from across the Citizens Advice service that show the firms to be using deceitful business practices.

Citizens Advice is also running a year-long study to assess whether lenders are complying with their voluntary code asking people to report their experiences – good and bad – of the payday loan industry via its online survey: adviceguide.org.uk/dialogue_payday_loan_survey

Citizens Advice wants consumers to have an option of collective action which means when they've all suffered the same fate by a company they can complain and get compensation together as opposed to individually. This type of action would work well for people who have been treated unfairly by payday lenders.