It has been condemned for charging 5,838 per cent interest rates, fined for sending threatening letters from bogus solicitors, and is so unpopular that even the Archbishop of Canterbury declared “war” on its business model.
But the new chairman of controversial payday lender Wonga set himself the Herculean task of reviving the firm’s reputation: announcing a series of measures that he conceded would lead to a drop in its annual £60 million profits in exchange for respectability.
“Some serious mistakes have been made. The company admitted those mistakes and it has apologised for those mistakes,” said Andy Haste, a former boss of insurers RSA and AXA Sun Life.
“We need to repair our reputation and regain our right to be an accepted part of the financial services sector.”
And in comments rarely heard coming from the mouth of a business leader, he added: “We will become a more customer focused, and inevitably in the near term, a smaller and less profitable business.”
Video: Wonga apologises for 'historic debt collection practises'
In an attempt to rebrand the contentious company as “acceptable”, Mr Haste revealed his intention to scrap the puppets that front in firm’s television advertising campaigns. The adverts have been branded irresponsible for trivialising debt and appealing to children.
Mr Haste said a review of the company’s customer base and products would also ensure it was “only lending to people who can reasonably afford our loans”.
Wonga said it would guarantee all lending was carried out in a “responsible and transparent manner”, which would result in a tightening of its lending criteria.
The new chairman also said he would bring in a culture of placing “fair treatment of customers at the heart of everything we do”.
But Mr Haste said he was realistic about the challenge he has set himself, which represents the most ambitious corporate rebrand since budget airline Ryanair pledged “revolutionary” changes to improve its tarnished reputation last year.
He told The Independent it would take years to clean up the image of Wonga following the fake legal letters scandal: “I am under no doubt it is a big challenge and will take a number of years.”
The father of three sons in their 20s said he did not know if any of them had taken a payday loan but added: “They are either students or in jobs so they don’t need them, but I would not have a problem with it if they did.”
The Financial Conduct Authority has introduced tough new consumer credit rules this month, including forcing all payday lenders to include a warning on their TV ads and a link to the Money Advice Service.
A radio ad for Wonga was banned last autumn for being irresponsible, while MoneySavingExpert Martin Lewis has called for the ban of payday lending advertising on children’s television. He accused lenders of grooming children to be the next generation of debtors saying: “Kids are being dazzled by catchy tunes and cute puppets.”
Mr Haste said the advertising will be changed to “reduce the risk of inadvertently attracting the very young or vulnerable”.
His appointment came a day before a major new crackdown on lenders. The Financial Conduct Authority is expected to announce a cap on the cost of payday lending this morning. The move is the latest watchdog attempt to clean up the industry but will hit the lender’s profits.
FCA chief Martin Wheatley told The Independent that the cap is designed “to achieve that balancing point between stopping excesses designed to abuse vulnerable consumers, while still allowing the availability of loans to those who can use them in a mature and responsible way”.
Separately, rival high street payday lender the Money Shop was yesterday forced to refund £700,000 of interest and default charges to 6,247 customers who took out unaffordable loans.