The Office of Fair Trading has sent over 50 warning letters to doorstep lenders ordering them to improve standards.
In the past year, the OFT says over half of the more than 200 applications for a home collected credit licence, including those applying to renew a credit licence, failed to satisfy the OFT that they would provide customers with the right information and credit documentation.
The OFT says most large providers are compliant but some smaller traders have failed to put appropriate compliance procedures in place.
Firms have three months to satisfy the OFT they are compliant, or will comply, with the requirements of the Consumer Credit Act.
The letters encourage lenders to join the industry trade body, the Consumer Credit Association, which provides additional support and advice on the use of documents and procedures that comply with the Act.
OFT director Ray Watson says: “We are working to improve practices in the industry to protect vulnerable consumers. Over the festive period, people are often looking to borrow money to cover their additional costs. Home credit can be a good solution for some people, but we strongly encourage borrowers to shop around for the cheapest and most suitable credit product available to them.”