DEBTORS in Halesowen will be breathing a sigh of relief today after Wonga announced it is writing off 330,000 customers' loans.

Google announced in the first six months of this year Halesowen residents were the second highest searchers for Wonga payday loans online in the UK.

The controversial payday lender has announced customers whose loan would not have been approved under new affordability guidelines would not have to pay the cash back - costing the lender an estimated £35 million.

The debt outstanding by customers affected is £220m with the average loan being £667 per borrower.

The Financial Conduct Authority said the 330,000 customers in excess of 30 days in arrears will have the balance of their loan written off and owe nothing.

And 45,000 customers who are within 29 days in arrears will be asked to repay their debt without interest and charges and can also pay off their debt over four months.

Wonga confirmed it would contact the borrowers by Friday, October 10.

Labour's parliamentary candidate for Halesowen and Rowley Regis, Stephanie Peacock, has campaigned against payday lenders.

She said: "It is extremely worrying that Halesowen residents are the second highest in the country looking for payday loans. Research shows that 80% of payday loans are taken out to pay for the costs of the basics like food and rent.

"It is a sign of the tough economic times that people are struggling and legal loan sharks are making huge profits on the back of them. 

She added: "The announcement today shows that Wonga have not been lending responsibly. These payday lenders trap people into cycles of debt, with outrageously high interest rates that quickly become too much for people to cope with.

"I have campaigned on this issue and Labour have committed to extend a levy on the unfair profits of payday lenders and use that money to help people access fairer credit."

Wonga, which is the most high profile of payday lenders due to its big budget advertising campaigns, offers a fixed interest rate of 365 per cent per year.

Wonga founder Errol Damelin resigned as chairman's in June and recently announced profits had dropped by 53% after it was forced to stop bullying borrowers who defaulted.

Clive Adamson, FCA director of supervision, said: "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."

New Wonga chairman Andy Haste said: "It's clear to me that the need for change at Wonga is real and urgent.

"Our regulator is determined to improve standards in consumer credit and I share that determination."

He added: "There is much to do in order to make Wonga a sustainable and accepted business, and today’s announcement is a significant step forward in that process."

Google measures search traffic on a scale from one to 100 and from January to July this year Halesowen scored 88 for the term ‘payday loan’ and ‘wonga.com’ a giant 94 points.

Only leafy Altrincham, in Manchester beat Halesowen, scoring 100 on both searches.