Well done, the Financial Conduct Authority. After about six months of regulation, it has achieved something the Office of Fair Trading, the previous supposed policeman, never did: forced the company to admit that its lending practices have been obscene and make substantial redress. In short, Wonga has been shoving ultra-high-interest loans towards hundreds of thousands of people who could never have afforded to repay them.

The result is a settlement that will see Wonga write off £220m-worth of loans made to 330,000 customers who are in arrears of 30 days or more. A further 45,000 people in arrears of less than 30 days will be asked to repay their debt without interest and charges.

That’s a total of 375,000 people who do not meet Wonga’s new affordability criteria for responsible lending. For context, that’s roughly the equivalent of the entire population of Kingston upon Hull. The company, under the now departed founder Errol Damelin, was lending irresponsibly on a colossal scale.

Damelin’s boast in last year’s annual report now looks ridiculous. “Access to practical and affordable sources of credit is a big issue for our society and Wonga is playing a part by lending responsibly, and at scale, to people who can generally afford to pay us back quickly,” he wrote.

Nonsense. The 375,000 figure is one in every five of the people Wonga lent to last year. The verdict of Andy Haste, the ex-RSA executive recruited to clean up Wonga as chairman, is damning: Wonga’s affordability checks were “not sufficiently sophisticated or strong enough”.

Defenders of old Wonga have tended to fall back on the pragmatic argument that if the company did not exist the alternatives would be worse; customers would fall into the hands of true loan sharks who do not answer to any regulator. There is clearly some force in this argument but it amounts to a cry of despair. A regulated lender ought to uphold certain standards on who it lends to and how it behaves. If it can’t, it doesn’t deserve to exist.

Haste has made the correct judgment that Wonga only has a future if it can show that its boasts about responsible lending come with the stamp of regulatory approval.

It remains to be seen whether there is still a viable business there when caps on lending rates are introduced next year. But Haste is on the right tack: Wonga, in its old buccaneering form, was out of control and doomed. The scandal of fake legal letters was an invitation to regulators to probe every dark corner.

The FCA’s next task is to apply the same remediation principles to all the Wonga imitators.