By Jonathan Davies

Many payday lenders are still failing to be fair to customers who have fallen behind on their repayments, according to the Financial Conduct Authority (FCA).

A report by the FCA found "serious non-compliance and unfair practices" in each of the payday lenders it investigated.

In some cases, lenders were using collection firms to chase repayments from customers, which is against the rules.

Despite the continued failing, the FCA did say that a number had improved their behaviour, with three lenders accepting medical evidence as the reason for customers not being able to pay.

The rules aim to give breathing space to customers who cannot pay on medical grounds.

Although the City regulator praised the three firms who complied with the rules, it said that some customers with medical problems are still being chased by debt collectors, causing "serious detriment and financial loss".

"Our rules are designed to ensure loans are affordable; that customers who get into difficulty are treated fairly and that they are not pressurised into unaffordable and unsustainable repayment plans," said Tracey McDermott, director of supervision and authorisations at the FCA.

A number of payday lenders face being put out of business in the coming months, if they don't comply with rules.

Lenders had to apply for full authorisation by the end of February. And over the next few months the FCA will consider which companies will be given authorisation to continue lending.