Citizens Advice has said the sending of fake legal letters chasing payday loan debts amounts to “callous intimidation.”

The Financial Conduct Authority has ordered payday lender Wonga to pay £2.6 million in compensation after it was found to have sent letters chasing debt repayments from legal firms that don’t exist.

Citizens Advice chief executive Gillian Guy said: “Fake legal letters hounding people in debt is callous intimidation. This latest revelation of payday lending practices is further evidence how out of control the industry has become.

“It is only fair the FCA makes Wonga compensate people who have been put under tremendous financial and emotional pressure because of these letters.

“Irresponsible payday lending has been a scourge on borrowers looking for a short-term loan to tide them over. People have been coming to Citizens Advice because payday lenders are harassing them, taking more money than they owe and chasing people for debts they didn’t take out.

“It is really important the FCA uses the powers it has to wipe out the horrendous practices used by many payday lenders.”