Can Wonga become people's champ under new leader?
Payday lender’s new boss says “the puppets will be going”, as he gears up to curb the firm’s disputed marketing campaigns and transform its image
Newly-appointed Wonga chairman Andy Haste has promised to change the public image of the controversial lender, as he strives to make the firm a “respectable part of the financial industry”. Handpicked by the Wonga board to lead the firm, Haste – who started yesterday – has attempted to hit the ground running by announcing plans and objectives aimed to address customer concerns, particularly overhauling Wonga’s much-criticised approach to marketing.
In April, a Wonga advert was banned for implying that charging an annual interest rate of 5,853% was “irrelevant”. The commercial consisted of a conversation between two old-age pensioner puppets who said: “Right, we’re going to explain the costs of a Wonga short-term loan. Some people think they will pay thousands of percent of interest. They won't of course – that's just the way annual rates are calculated. Say you borrowed £150 for 18 days, it would cost you £33.49.”
The advert was attacked for trivialising interest rates on short-term loans, and the Advertising Standards Authority (ASA) received 31 complaints. Haste explained: “I am very aware of the criticism of the current approach, and the puppets will be going. I am going to be reviewing all of our advertising and marketing to make sure we don’t leave any impression that we are trying to influence or target the very young or the vulnerable.”
To turn around the public perception of Wonga, which has also come under fire from debt charities and politicians, Haste will have to use all his years of experience in the financial sector and consumer-credit industry, which included eight years as chief executive of RSA Insurance Group. His other executive work includes a stint as senior independent director of ITV. Haste said: “I am pleased to be joining Wonga at a very important time for the group and the industry. This is a sector that is necessarily undergoing significant change and Wonga will change with it in order to have a sustainable future.”
With that in mind, Haste added, his tenure will be based on six priorities:
1. To conduct a review of Wonga’s customer base and products to ensure that the group is lending only to customers who can reasonably afford to repay their loans.
2. To ensure all lending is conducted in a responsible and transparent manner and delivers the best outcomes for customers. This will lead to a tightening of Wonga’s lending criteria.
3. To address the total cost of credit and ensure even greater transparency in Wonga’s products.
4. To represent Wonga to the public – especially through its advertising – in a way that accesses the right type of customer and reduces the risk of inadvertently attracting the very young or vulnerable.
5. To build a sustainable business model with superior technology and operating processes that deliver effectively and put customers and good governance at the heart of everything Wonga does.
6. To engage positively with Wonga’s regulators and other key stakeholders in all of its markets to ensure that the business is operated transparently, with the right systems and controls to protect those individuals for whom Wonga recognises its products are not appropriate.
“Our goal is to deliver the original vision for Wonga,” Haste explained, “and to provide short-term lending to the right customers in a responsible and transparent way. We will become a more customer focused, and inevitably in the near term, a smaller and less profitable business.” However, he said, “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.”
For resources that address the issues in this article, check out CMI’s change management toolkit.