Payday lenders are 'out of control'

Fresh evidence of "out of control" payday lenders failing to act responsibly and hounding people for money has emerged, according to a debt advice charity.

Citizens Advice said it had seen cases in recent months which included payday lending to people who were aged under 18, had mental health issues or were drunk when they took out the loan.

The findings come at a time when Britain's biggest payday lenders are under threat of being put out of business if they fail to prove to the Office of Fair Trading (OFT) that their practices are up to scratch. The OFT is expected to announce whether it will refer the payday market for an investigation by the Competition Commission next month.

Citizens Advice said the OFT must take "tough and immediate action" after the trading watchdog handed 50 payday lenders a 12-week deadline in early March to prove their good behaviour or risk losing their licences, which they need in order to trade.

The Citizens Advice analysis came from 780 cases reported to it between November 2012 and this month. It also found that people were being chased for loans they had never taken out and customers were being "hounded" at their home to shame them into paying.

Citizens Advice chief executive Gillian Guy described the payday loan industry as "out of control" and said it has shown a "complete disregard" for customers.