The FCA has forced Wonga to compensate 45,000 of its customers by £2.6m for unfair and misleading debt collection practices.

Wonga sent letters to customers in arrears from imaginary law firms ‘Chainey, D’Amato & Shannon’ and ‘Barker and Lowe Legal Recoveries’ threatening legal action between October 2008 and November 2010.

The intimidating tactic was used to maximise collections, as further legal action was threatened if the debt was not repaid.

The investigation was started by the Office of Fair Trading in 2011 before being taken up by the FCA in April.

Clive Adamson, director of supervision at the FCA, said: “Wonga’s misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears.

“We are pleased that Wonga has been working with us to put matters right for its customers and to ensure that these historical practices are truly a thing of the past.

“The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments.”

In some instances, Wonga added charges directly to customers’ accounts to cover the administration fees for sending the letters.

The payday lender has been ordered to identify and pay redress to all affected customers, while an FCA figure will oversee the process.

The process will start by mid-July with compensation likely to be paid from the end of July, while Wonga will contact those affected.