Payday lender Wonga has said that it is writing off £220 million of debts from 330,000 customer after implementing new affordability checks.
Under the voluntary agreement with the Financial Conduct Authority (FCA), 330,000 Wonga borrowers that are over 30 days in arrears will have the balance of their loan written off and will owe Wonga nothing, and a further 45,000 customers in arrears up to 29 days will not have to pay interest on their loans.
The changes come after discussions with the FCA and a review of lending practices by its new chairman Andy Haste.
In a statement, the lender said:
“We have been working closely with the FCA to agree additional requirements to our lending criteria, which have been implemented as of the 2nd October 2014 across our UK consumer loans service.
“We have also today committed to a major customer forbearance programme for many existing customers whose loans would not have been made had they been subject to the new affordability criteria introduced today.”
FCA director of supervision Clive Adamson said:
“We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations. This should put the rest of the industry on notice – they need to lend affordably and responsibly.
“It is absolutely right that Wonga’s new management team has acted quickly to put things right for their customers after these issues were raised by the FCA.”
Customers affected by the changes will be notified by 10 October.