New Wonga Chairperson to “Reinvent Business Model”
Wonga is the UK’s biggest payday lender, offering customers small, short-term loans at high interest rates on the agreement that said customer repays back some or all of the loan on their next payday.
The company has been in the news a lot recently, but for all of the wrong reasons – criticised for its almost-6,000% annual equivalent interest rates, heavily fined for sending threatening letters from falsified solicitors, their chairperson resigned last month, and the Archbishop of Canterbury declared business war on the company.
But now Wonga is putting someone new in the hot seat in the hope of reshaping the company into the respected brand it was originally intended to be.
Former RSA chairperson Andy Haste is instigating a mass overhaul of operations and vows to revive the company’s reputation with honest means. “Some serious mistakes have been made,” he announced. “The company admitted those mistakes and it has apologised for those mistakes.”
One of the first items on Mr Haste’s agenda is to clean up the company’s advertising – the puppets have to go. He explained that the cuddly-looking puppets and catchy theme tunes appear to trivialise debt and inadvertently attract children.
On top of this, Mr Haste will also look into marketing and advertising across the whole spectrum (not just on television), as well as how much advertising is happening during children’s programming. This is something that the whole payday loan sector has been criticised for and that Ofcom is looking into.
Mr Haste said that he wanted to change the type of business that Wonga has become, repairing its reputation and regaining its right to be accepted as part of the financial services sector, even if it means the company making less money.
“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, explaining that the company will be becoming more customer-focused, making the necessary changes to serve its customers in the right way, ultimately becoming a business with a long-term future.
Six main areas will be assessed as part of Mr Haste’s review: making loans more affordable for customers; becoming more strict on who is approved for a loan; total loan cost to a customer, and not just amount of weekly repayments; advertising; updating technology; and working more closely with regulators.
“We have got to reinvent the whole business model,” he explained. “We have to create products that the customers need and can afford and pay back, and that is sustainable. That is the change that is necessary for the industry, and for Wonga.”