Wonga has been forced to write off £220m in loan debt to 330,000 customers after consulting with the Financial Conduct Authority.
The FCA said Wonga was not taking adequate steps to assess customers’ ability to meet repayments after requesting information about its lending rates. The pair have now agreed an approach for remedial address.
The payday lender has introduced interim lending criteria while it is working to put a permanent lending decision platform in place. The FCA will also appoint a skilled person to monitor the Wonga’s new lending platform.
Clive Adamson, director of supervision at the FCA, 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.”
The 330,000 customers who are having their debts written entirely off were in excess of 30 days arrears, while a further 45,000 up to 29 days in arrears will be asked to pay off their loan balance within four months without owing Wonga any interest.
Wonga will notify customers on whether they are part of a redress scheme by 10 October, and customers should continue making payments unless they are told to stop by the firm.
The FCA will continue to work with Wonga to identify whether there is any other remedial action required in future.