Payday loans in the UK have been long time neglected and unregulated matter in the UK financial sphere. This lead to criminal and highly unrighteous situation where thousands of people, usually ignorant of the small print in their loan contracts, have been used to enrich greedy lenders. The latest regulations are a positive and rightful, though belated, act of punishment of the illegal lending practices used by certain UK lenders.
If they can afford to forgive that much debt, then that is awesome. People will feel more valuable to their country, knowing that they aren't in as much debt. It will create a happier environment. A happy environment where people don't feel so overwhelmed with debt might actually stimulate economy growth.
It is a smart move for lenders to forgive junk debt for the consumers that were swindled into it. Debt grew out of control in the last decade as lenders gave credit to those who should not have had it. It is long past time for them to take some of the fall out. It is a hopeful move to see the regulators and lenders begin to help solve this problem and help the consumers dig out of the whole they threw them in.
No, showing leniency to the consumers in debt to UK lenders is not a smart move. I believe that people should be responsible for their debts. If the debts have become a burden plans should be negotiated to repay them in a timely and efficient way. Allowing debts to be forgiven gives a person the sense of not having to pay their debts, thus leading them to think they are able to get away with such things all the time. Additionally, the UK lenders could possibly make it more difficult for others to request lending help.