The CAB has called on the Office for Fair Trading, which is conducting its own probe into the payday lending industry, to immediately ban those lenders its investigation found are causing harm to borrowers.

Analysing customer feedback on 2,000 payday loans from more than 110 different payday lenders – including in-depth scrutiny of 780 cases – the CAB found widespread failings among providers.

Among them were that 87% failed to ask the borrower to provide documents to prove they can afford to repay the loan, and that 58% did not warn that a payday loan should not be used for long-term borrowing or to deal with money troubles.

Additionally, 84% of people who had repayment problems were not offered the chance to freeze interest and charges when they were struggling to pay it back, while 72% actually put pressure on people struggling to repay to extend their loan.

Gillian Guy, chief executive of Citizens Advice, said: “The payday loan industry is out of control and is acting as a law unto itself.

“It has showed a complete disregard for its customers. Many have been driven into debt by irresponsible lending and their debts ballooned as lenders put pressure on them to extend the loans.

“The OFT has an opportunity to wipe out the distress caused by this industry and make sure it is transformed into a responsible short-term credit market.”

Michael Ossei, personal finance expert at uSwitch.com, said: “With adverts popping up left, right and centre, it’s easy to see how so many people are turning to payday lenders when their bank says ‘no’ to more money. The promise of a fast fix of cash with minimal credit checks is all too tempting – especially to those who are struggling to obtain credit. But consumers need help, support and guidance rather than being led further into debt.

“Today’s findings leave no doubt that payday lenders are letting consumers down. Rather than putting their resources into adequate affordability checks, they are using persuasive advertising at every opportunity to get as many people signed up as possible.

“Unfortunately it is often the young or the financially vulnerable that are lured in, with insufficient funds to repay their loans. This highlights the mounting need for more responsible advertising – with the consequences of not meeting repayments made clearer.”