Approximately 45,000 customers who are between 0 and 29 days in arrears will be asked to repay their debt without interest and charges while 330,000 customers who are in excess of 30 days arrears will have their balance entirely written off.

When the FCA took over regulation of consumer credit in April this year it asked Wonga for information about the volume of its relending rates which uncovered the lender’s failure to assess the its customers’ ability to make repayments.

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.”

A statement published on Wonga’s website said: “You may have already read or heard in the news recently an announcement from the Financial Conduct Authority (FCA) regarding changes to our lending criteria.

“We have been working closely with the FCA to agree additional requirements to our lending criteria, which have been implemented as of the 2 October 2014.

“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.”

Adamson said it was ‘absolutely right that Wonga’s new management team acted quickly to put things right’.

Wonga will be contacting all customers by 10 October to notify them if they will be included in the redress programme.

Customers should now continue to make payments unless they are told to stop by the firm. Borrowers who are experiencing financial difficulty, should contact Wonga to discuss their options.

The FCA will continue to work with Wonga to identify whether there is any other remedial action required.