Wonga is to write off the debts of hundreds of thousands of customers after admitting it made loans to people who could not afford to repay them.
The payday lender is cancelling £220 million in debts, including around 330,000 customers who are currently in excess of 30 days in arrears will have the balance of their loan written off and will owe Wonga nothing.
The move by the pay-day lender comes after an agreement with the Financial Conduct Authority (FCA) that requires it to make significant changes to its business immediately.
The review also means around 45,000 customers who are up to 29 days in arrears will be asked to repay their debt without interest and charges and will be given an option of paying off their debt over an extended period of four months.
Wonga's new chairman Andy Haste said: "We want to ensure we only lend to those who can reasonably afford the loan in question and during my review, it became clear to me that this has unfortunately not always been the case.
"I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions."
The news follows Wonga's profits halving in 2013, after the controversial lender was forced to pay out £10m to customers whom it threatened with fake legal letters.Suggest a correction