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 1 Version 2
Wonga appoints chairman with blue-chip financial credentials Wonga appoints chairman with blue-chip financial credentials
(about 4 hours later)
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. The controversial cuddly puppets used in advertising by payday lender Wonga are being axed a part of a clean-up operation by its newly appointed chairman to improve the firm's reputation.
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. Andy Haste, a former executive of blue-chip insurance companies, started his £500,000-a-year job as Wonga chairman on Monday with a blunt message that the company needed to change. "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.
"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. As well as eye-watering interest rates that can be equivalent to an annual 5,853%, Wonga has been accused of using cute puppets and catchy tunes in adverts aired during primetime children's TV.
"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." "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."
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, a 52-year-old City veteran who has led the centuries-old RSA insurance company as well as its rival AXA Sunlife, was a surprise choice for Wonga, founded in 2006 to offer short-term credit at sky-high rates.
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." The UK's biggest payday lender has been without a permanent chief executive or chairman since its co-founder Errol Damelin quit as chairman in June last month. Damelin's departure, 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 by issuing letters to struggling borrowers under the name of fake legal firms.
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. The Financial Conduct Authority said Wonga had been guilty of "unfair and misleading debt collection practices" after it emerged the lender had made up the companies to threaten legal action against customers.
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 Law Society has called for a criminal investigation but Haste said Wonga had not been contacted by police. "As of today we are not under criminal investigation and our whole focus is working with our regulator to pay compensation to customers in a timely manner."
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. Wonga has also been attacked for "legal loansharking", uniting MP Stella Creasy and the Archbishop of Canterbury in condemnation of the high cost of its loans. Last week the Church of England announced it had ended its indirect investment in Wonga, a holding that had "embarrassed" and "irritated" the Archbishop of Canterbury, Justin Welby, who had said he wanted to "compete Wonga out of existence" by boosting credit unions.
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." 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."
Citizens Advice chief executive Gillian Guy said: "Cartoon characters promoting payday lending send the wrong message to borrowers. Years of debt are not cuddly or jovial, but instead are tough and distressing. It is good that one of the biggest payday lenders has come to its senses."
The company 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 is day one and we continue to be a proud sponsor of Newcastle United."
Wonga has never disclosed how much it paid to have its name emblazoned on Newcastle's black and white shirts, but the four-year deal that began in the 2013-14 season is thought to be worth £8m.
Haste expects Wonga's business and profits to shrink when a new cap on the industry's charges – to be announced on Tuesday – 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."
The expected restrictions on overall charges, including interest rates and fees, are part of a wider clampdown on payday lenders that began this month with restrictions on the number of times loans can be rolled over or extended, and rules preventing firms making more than two unsuccessful attempts to take cash directly from customer's bank accounts.
Many smaller payday lenders have already been forced out of the market because tougher regulation has made it harder and more expensive to operate.
Haste said the company's priorities included a review of customers to ensure it is only lending to people "who can reasonably afford to repay their loans", and ensuring transparent lending, which he said would "lead to a tightening of Wonga's lending criteria".
He said Wonga, which operates in nine countries with 4 million customers, could increase its profits in the medium term by repairing its reputation.