Payday lenders that fail to meet tougher guidelines will be “taken out” by the Financial Conduct Authority (FCA), the body has warned.

The FCA has assumed control of regulating the market from the Office of Fair Trading (OFT) and has warned of a stricter regime for credit companies.

"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 BBC Radio 5 live this morning.

Despite rising popularity, payday lenders have come in for severe criticism in recent years. Opponents argue that they target vulnerable people and charge inflated rates of interest.

Some payday lenders offer services to small businesses as well as consumers.