This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2014/jul/14/wonga-appoints-chairman-andy-haste

The article has changed 3 times. There is an RSS feed of changes available.

Version 0 Version 1
Wonga appoints chairman with blue-chip financial credentials Wonga appoints chairman with blue-chip financial credentials
(about 3 hours later)
An executive with blue-chip City credentials is taking up the reins as chairman of Wonga, as the controversial payday lender attempts to repair a reputation battered by sending fake lawyers' letters to thousands of struggling customers. Wonga's cuddly grandparent puppets are getting the chop, as its newly appointed chairman attempts to clean up the payday lender that has become a byword for "legal loansharking" and seen its reputation battered by revelations that it sent fake lawyers' letters to thousands of struggling customers.
Andy Haste, a former chief executive of insurer RSA and AXA Sun Life, starts the job with immediate effect, and said he had a clear mandate from Wonga shareholders to lead change across the company. Andy Haste, a former executive of bluechip insurance companies, started his £500,000 a year job as Wonga chairman on Monday, with a blunt message that the company needed to change.
The UK's biggest payday lender has been without a permanent chief executive or chairman since co-founder Errol Damelin quit as chairman in June. His abrupt departure – just seven months after he stood down as chief executive – came just before the financial regulator fined the payday lender £2.6m for misleading customers over fake lawyers' letters. "Wonga has understandably faced criticism and we know we need to repair our reputation and regain our right to be an accepted part of the financial service sector," he said. As well as sky-high interest rates, Wonga has been accused of using "cute puppets" and catchy tunes in adverts aired in prime-time children's TV slots to appeal to a young age group.
The Financial Conduct Authority said Wonga had been guilty of "unfair and misleading debt collection practices" after it emerged the lender had made up companies to threaten legal action against customers struggling with repayments. "The puppets are going and I think that is right," said Haste. "I am very aware of the criticism there has been of our advertising and marketing, which is one of my priorities to review." Insisting it was "not just about the puppets" he said: "We will be reviewing how we go to market across the piste, not just on TV."
Wonga has also been attacked for "legal loan-sharking" and has come under criticism from MPs and the archbishop of Canterbury for charging interest at 5,853% APR. This month tougher regulation for the payday loan sector came into force that restricts the number of times loans can be rolled over or extended, and prevents firms making more than two unsuccessful attempts to take cash from customers' bank accounts. But Wonga declined to confirm whether it will end its sponsorship of Newcastle United football team. A spokesman said: "I don't want to prejudge the chairman. It's day 1 and we continue to be a proud sponsor of Newcastle United." Wonga have never disclosed how much they paid to have their name emblazoned on Newcastle's black and white shirts, but the 4-year deal that began in the 2013-14 season is thought to be worth £8m.
Haste also confirmed that Wonga's cuddly grandparent puppets - used in primetime TV advertising slots - would be axed as Wonga did not want to be associated with anything that might attract children. Haste, a 52-year old City veteran, who led the centuries old RSA insurance company and its rival AXA Sunlife, was a surprise choice for Wonga, founded in 2006 offering short-term credit at eye-watering rates. The UK's biggest payday lender has been without a permanent chief executive or chairman, since co-founder Errol Damelin quit as chairman in June. Damelin's abrupt departure - just seven months after he stood down as chief executive - came just before the financial regulator ordered the payday lender to pay £2.6m in compensation for misleading customers over fake lawyers' letters. The Financial Conduct Authority said Wonga had been guilty of "unfair and misleading debt collection practices" after it emerged the lender had made-up companies to threaten legal action against customers struggling with repayments. Since then the Law Society, has called for a criminal investigation of Wonga, but Haste said the lender had not been contacted by police. "As of today we are not under our criminal investigation and our whole focus is working with our regulator to pay compensation to customers in a timely manner."
"I am very aware of the criticism of our current approach and the puppets will be going. And I am going to be reviewing all of our advertising and marketing to make sure we don't leave any impression that we are targeting the young and the vulnerable." Wonga has also been attacked for "legal loan-sharking", uniting MPs and the Archbishop of Canterbury in condemnation of its 5,853% APR interest rates. Last week the Church of England announced it had ended its investment in Wonga, a holding that had "embarrassed" and "irritated" the Archbishop of Canterbury Justin Welby, who wants to "compete Wonga out of existence" by boosting credit unions. Asked whether Wonga could ever become a firm the Church would choose to invest in, Haste said: "I would be absolutely very happy to meet with the Archbishop or anyone on his team to discuss those issues, to hear their concerns, to outline the programme of change we have at Wonga and where appropriate make changes as a result." Haste expects Wonga's business and profits to shrink, if as expected a new cap on the interest rates it can charge comes into force. "It is inevitable and understandable and accepted by our shareholders that in the near term we will likely be a smaller and less profitable business." Restrictions on interest rates are part of a wider clamp down on the payday loan sector that started earlier this month, with restrictions on the number of times loans can be rolled over or extended, and preventing firms making more than two unsuccessful attempts to take cash from customer's bank accounts. Haste said out six priorities, including a review of Wonga's customer base to ensure that the company is only lending to people "who can reasonably afford to repay their loans", as well as ensuring transparent lending, which he said would "lead to a tightening of Wonga's lending criteria". Haste said that Wonga, which operates in 9 countries with 4 m customers, could increase its profits in the medium-term, by repairing its reputation.
He will also look into advertising during children's TV programmes, a question Ofcom is already investigating. Haste was well-regarded during his 8 years at RSA, which owns the More Than car and home insurance brands. But his tenure ended in controversy in 2011 when he walked away with a £500,000 golden goodbye despite leaving of his own accord.
The City veteran will be paid £500,000 in his first year at Wonga, falling to £300,000 in the second year to reflect the expected reduction in his workload once the current problems are addressed. The City veteran will be paid £500,000 in his first year at Wonga, falling to £300,000 within a year to 18 months to reflect the expected reduction in his workload once current problems are addressed. Wonga is still without a chief executive, although chief financial officer Tim Weller, is doing the job as a temporary stand in.
Haste set out six priorities, including a review of Wonga's customer base to ensure that the company is only lending to people "who can reasonably afford to repay their loans", as well as ensuring transparent lending, which he said would "lead to a tightening of Wonga's lending criteria". Haste admitted he had to think carefully when the approach to join Wonga came via a headhunter a few weeks ago. "Clearly it is one that you have to think about," he said. "I wouldn't have taken this on if I had not been given a very clear mandate for change in this business."
"Our goal is to deliver the original vision for Wonga – to provide short-term lending to the right customers in a responsible and transparent way," he said. "We will become a more customer focused, and inevitably in the near term, a smaller and less profitable business. However, we are determined to make the necessary changes and serve our customers in the right way, to repair our reputation and become a business with a long-term future and an accepted place in the financial services industry."