Profits slide as Wonga tries to clean up its image

The payday lender Wonga is expected to announce a slump in profits on Tuesday to around £50m for 2013, from £84.5m the previous year.

The company is reshaping its operations on the back of tougher consumer credit laws that came into force in April, which have hit all short-term credit providers. But it is also expected to take a multimillion-pound hit to cover legal and regulatory costs linked to the “fake lawyers” scandal, which blew up this summer.

In July the lender appointed the City big-hitter Andy Haste – former boss of the insurer RSA – as chairman in an attempt to restore its reputation.

He admitted that profits would fall as it refocused its 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. We will become a more customer-focused and, inevitably in the near term, a smaller and less profitable business.”

As part of that change, Wonga this month announced the appointment of Tara Kneafsey – another recruit from RSA – as managing director of its UK consumer loans business. She will join later in the year.