The watchdog is taking over regulation of the outfits from the Office of Fair Trading, the BBC reports. As well as payday loan providers, the FCA is also taking on responsibility for credit cards, hire purchase, debt management firms and debt advisers.

“Our processes will probably force about a quarter of the firms out of the industry, and that’s a good thing, as those are the ones that have poor practices,” Martin Wheatley, chief executive of the FCA, told 5 live.

However, the Consumer Finance Association, which represents payday lenders, said demand among consumers was still high and regulation would help standards improve.