The new chairman of controversial payday lender Wonga has promised to clean up the company and ditch its “puppet” advertising campaign as he admitted it had made “serious mistakes”.
Andy Haste, former chief executive of More Than insurance group RSA, said the business needed to undergo “significant change” even though this would hit profits in the short term.
Mr Haste is to receive an annual salary of £500,000 over his first 18 months in the role, later falling to £300,000.
The position of chairman has been vacant since founder Errol Damelin stepped down earlier this year.
His appointment comes weeks after Wonga said it had agreed with regulators that it would pay £2.6 million in compensation after chasing struggling customers with fake legal letters to pressurise them into paying up.
Mr Haste said the company, which has been strongly criticised by MPs over interest rates of more than 5,000%, must review rates, fees and charges and no longer be seen as targeting “the young and the vulnerable”.
He said: “This is a sector and Wonga is a company that needs to go through significant change if it is to have a sustainable future.
“Some serious mistakes have been made. The company admitted those mistakes and it has apologised for those mistakes.
“Wonga has understandably faced a lot of criticism and I know that we need to repair our reputation and regain our right to be an accepted part of the financial services sector.”
The new chairman pointed to the rapid growth of the company, which has more than a million customers after being founded seven years ago to explain how “some of our systems, our processes, our controls, haven’t kept pace”.
Mr Haste said a review of its customer base and products would ensure it was “only lending to people who can reasonably afford our loans”.
Wonga said it would also ensure all lending was carried out in a “responsible and transparent manner”, which would result in a tightening of its lending criteria.
The new chairman said he would bring in a culture of placing “fair treatment of customers at the heart of everything we do”.
Mr Haste said he was “very aware” of criticism of its current advertising and marketing campaign and said: “The puppets will be going.”
He said: “I am going to be reviewing all of our advertising and marketing to make sure that we don’t leave any impression that we are trying to influence or target the very young or the vulnerable.”
Mr Haste added: “Our goal is to deliver the original vision for Wonga - to provide short-term lending to the right customer 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, 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.”
Mr Haste was chief executive at RSA from 2003 to 2011 and previously held the same position at AXA Sun Life. He is also senior independent director at ITV and senior independent deputy chairman of Lloyd’s of London.
Last week, the Church of England’s investment arm announced that it had severed ties with Wonga, which had been an embarrassment for the Archbishop of Canterbury after he spoke out against the payday lending industry.
Meanwhile, another of the UK’s largest payday lenders is to refund borrowers who received loans that exceeded its lending criteria.
The Money Shop has promised to pay more than £700,000 in interest and default charges to 6,247 customers after it was exposed for failing to ensure that proper checks took place to ensure that borrowers did not take on more than they could afford to pay back.
Investigators from the Office of Fair Trading raised concerns about Dollar, which owns the firm, and its lending decisions in February.
Dollar will contact all affected customers and expects to provide refunds totalling £79,000, with the remainder of borrowers having their outstanding balance reduced. The company has blamed a systems error for the mistakes, which cover a period between January 2013 and April this year.