Hidalgo's likely triumph was a rare moment for celebration in what was a dismal evening for Hollande. Photograph: Chesnot/Getty Images Paris looked set to elect its first female mayor on Sunday night, but the victory for socialist Anne Hidalgo was an isolated piece of good news for President François Hollande's embattled party. The exit polls showed that Spanish-born Hidalgo, 54, was estimated to have won, with 55% of the vote, well ahead of her centre-right rival Nathalie Kosciusko-Morizet. If her victory is confirmed in a final count Hidalgo will succeed the popular Socialist mayor Bertrand Delanoë, who has run the city since 2001. Last year she told the Guardian that running Paris was "the best elected job that exists". But her probable triumph was a rare moment for celebration in what was a dismal evening for Hollande, whose popularity was already at rock bottom even before Sunday's vote, and his Socialist (PS) government. Elsewhere, the Front National appeared to have once again punched above its real electoral weight in what may well turn out to have been a protest vote. The party's charismatic president, Marine Le Pen, said the results marked a "new step for the FN" and said she hoped to translate its success into seats in the European elections in May. "The Front National has upset the traditional UMP-PS duo. From now on they will have to count on a third great political force in our country," Le Pen said. The revival of the FN as the Socialists struggle takes the far-right party back to levels last seen in 2002 when far-right presidential candidate Jean-Marie Le Pen knocked out the Socialist candidate in the first round of the presidential elections. The FN took the towns of Béziers, where FN candidate Robert Ménard, former head of Reporters Sans Frontiers, obtained more than 47% of the vote, and Fréjus, but lost the symbolic city of Avignon, where the FN candidate had led the first-round vote. Most of the FN's successes were in the east and west of the country in areas with high unemployment and immigration. If there was any small consolation for the president and his administration, it was that while the centre-right UMP emerged overall winners, it was that the FN had not done as well as results of first-round voting last Sunday had suggested. In the rest of the country, French voters stayed away from polling stations in record numbers for the second round of local elections. The 38% rate of abstention in the second round of the election was seen as a direct message of disillusion with the country's ruling class, particularly the struggling Socialist government headed by Hollande. Among the most symbolic losses for the governing Socialists were those of the town of Limoges, which the left had held since 1912, Saint Etienne, which fell to a UMP candidate, Belfort, which went to the right, and Quimper in Brittany, which elected an UMP mayor. Najat Vallaud-Belkacem, spokesperson for the government, was the first to admit: "The results are bad. We hear the message that has been sent." Jean-Francois Copé of the centre-right UMP said the local elections were an overwhelming success for his opposition party. "It's a blue wave … the first major victory for the UP in a local election,' he said. There were fears that the high level of abstentions among voters would play in favour of the FN. However, the first estimates showed an increase in support for the mainstream right opposition UMP party, while support for the far-right, which has undoubtedly increased, was not as great as had been suggested by the first-round vote. Local elections are traditionally seen as a way for the electorate to express their dissatisfaction with the government of the day. Around 30,000 of the 36,000 municipalities in France had already elected their mayors in the first round. This included one FN mayor elected outright. Only in areas where no party obtained more than 50% of the vote did the election go to a second round. However, in those 6,000 areas, the FN has a strong showing, particularly in the south of France. In Avignon, one of the towns in which the FN led after the first round, the Socialist party candidate won the seat. The abstention level in the first round last Sunday was 36.45%, already high and an indication of voter disaffection with the mainstream political parties ahead of this weekend's poll. Nonna Mayer, research director at the Centre of European Studies at Sciences Po, said: "They can't be stopped. It's the first time the Front National has organised such an electoral dynamic in local elections. Mayer said the FN was benefiting from a "give them a go" attitude in France. She added: "Voters are so tired of the economic situation and they have the feeling that the left and the right have been unable to find a solution … they say we have tried everything, why not try the Front National." First estimates suggested 49% of voters had supported centre right UMP candidates, 42% Socialist party candidates, and 9% the Front National, a substantial increase in support for the far-right. Ségolène Royal, a former presidential candidate, said the results were a "severe warning" for the government. "It's the party system that has been punished," she said. "There are a number of French people who have had enough of the system. They want democracy. "The French have not seen the results of the efforts we have demanded of them." She added: "I hope this defeat will awaken the team in power." French finance minister Pierre Moscovici admitted: "It's difficult to reform a country like France. This is undoubtedly a defeat for us."

Errol Damelin is said to have grown weary of having to constantly defend Wonga from political attacks and public outcry. Photograph: Sarah Lee for the Guardian

The multi-millionaire figurehead of the controversial payday lending industry is to stand down from his job as chairman of Wonga as a new City regulator prepares to impose tougher rules.

Errol Damelin will stand down in the next couple of months, according to sources close to the company, but the South African retains a valuable 5% share in the company he founded, with an estimated value of £50m.

The 44-year-old has grown weary of having to constantly defend the company from political attacks and public outcry. Criticised by the Labour MP Stella Creasy for "legal loan-sharking", Wonga charges interest at 5,853% APR.

That equates to a customer who borrows £400 having to repay £551.48 after 36 days.

His exit comes as the new City regulator, the Financial Conduct Authority prepares to impose tough rules to try to prevent payday lenders preying on struggling families, when it takes control of the industry on Tuesday.

The FCA has promised take a "hands on" approach to regulating Wonga and other payday lenders, including unannounced visits to companies' offices to inspect how they handle defaults and examine adverts and promotions.

Damelin is particularly frustrated about the company being referred to as a legal loan shark. He believes Wonga should be regarded as a technological innovation, rather than a money lender and refers to it as Britain's version of Facebook, Amazon and Apple.

A fitness freak who has competed in the Antarctic Ice Marathon on a glacier near the South Pole in temperatures of -30C, Damelin regularly runs to Wonga's stucco-fronted offices near Regent's Park from his six-bedroom Hampstead home. He founded Wonga in 2007 with the engineer-turned-artist Jonty Hurwitz.

A source close to Wonga said the company's board had decided that Damelin was no longer the right person to lead the company. "We will become FCA regulated from Tuesday, the business will be regulated like a mainstream financial services business. With additional investigations, the role of chairman has changed," the source told the Guardian . "We are looking for a financial services heavyweight."

Martin Wheatley, the FCA chief executive, said: "There will be no place in an FCA-regulated consumer credit market for payday lenders that only care about making a fast buck. Our new rules will help us to protect consumers and give us strong new powers to tackle any firm found to be overstepping the line."

The chancellor has also instructed the FCA to introduce a cap on the amount of interest Wonga and other payday lenders are able to charge. George Osborne said the cap would "make sure that hardworking people get a fair deal from the financial system, whether it's the banks or the payday lenders or the internet lenders". The cap, which had previously been blocked by Tory MPs, is expected to be introduced on 2 January 2015.

Damelin's privately held stake in Wonga could be worth hundreds of millions of pounds if the company is sold or floats on the stock market. He owns 9.8m Wonga shares, according to the firm's latest filing with Companies House. Wonga made pre-tax profits of £84.5m in 2012, a 35% increase on 2011.

The Tory party donor and venture capitalist Adrian Beecroft also stands to benefit if the company succeeds in its plans to float on the Nasdaq stock exchange in New York with a £1bn valuation.

Beecroft, who has donated £537,076 to the Tories, is chairman of the private equity firm Dawn Capital, one of the biggest holders of Wonga's stock.

Damelin has also attracted the ire of the Church of England. Last year, the archbishop of Canterbury, Justin Welby met Damelin and personally promised to "compete you out of existence" by expanding credit unions.

Welby, however, was later embarrassed by the revelation that the church's pension fund held a stake in Wonga. It admitted this month that it still holds the £80,000 investment, despite Welby's promise to sell it.

Wonga, which sponsors Newcastle United, Blackpool and Heart of Midlothian, issues loans online within 15 minutes. It says its secret algorithm analysis 8,000 pieces of information to determine the applicant's credit risk, including their Facebook profile.