Wonga’s New Recruits
Wonga has been hitting the headlines for all the wrong reasons so they have made a bold move to repair its reputation after a run of fines and write-offs. In a new effort to prevent bad behaviour, Wonga have brought in a new board member- the previous head of responsible business and community affairs from Lloyds Banking Group, Graham Lindsay.
Wonga was recently forced to write off a staggering £220 million worth of debts after failing to carry out the necessary affordability check on borrowers. This lead the company to seriously review its business model and now hope that Graham Lindsay’s 40 years of experience in the banking industry can help in a new non-executive role.
Changes For The Payday Loan Lenders
Wonga claim to have had a total reshuffle of their board which is now primarily made up of non-executive members whose role is to oversee Wonga’s management team.
The addition of Graham Lindsay is no huge surprise as only last month Wonga recruited Neil Macmillan as a non-executive board member. Macmillan, similarly to Lindsay, has a history in risk and compliance. Wonga also chose a new UK Managing Director as part of the reshuffle, Tara Kneafsey former executive at RSA.
Andy Haste, who has been the Chairman at Wonga since July 2014, said he was pleased to welcome Lindsay to the Wonga team and hopes he will bring “extensive customer-focussed financial services experience” to the team. Haste went on to say that Lindsay would add further strength to the Wonga board team and enhance “the balance of skills and expertise at that level too”.
Wonga has seen many other changes in the last year including a change to its advertising. They got rid of the old puppet based television adverts to reduce the appeal to younger viewers. They also axed over 300 jobs in a bid to improve the company’s processes.
FCA Regulation Changes And The Effects
The company now offers more term loans, for 3 months or 6 months, reducing the number of payday loans which have become subject to the new FCA caps as of January 2015. Wonga reacted to the change in regulations by reducing its annual interest rate by nearly 75% but also changed their minimum loan amount from £1 up to £50.
Wonga is still among the many companies waiting for full FCA authorisation since they took over responsibility for consumer credit nearly 2 years ago. Wonga was initially set up as a finance solution for young professionals but soon became a loan provider for those who found themselves turned down by other loan providers. This soon led to issues with affordability for their borrowers and many missed payments.
One of the bigger headlines hit when Wonga issued letters to customers who had missed payments from fake law firms which sparked outrage and resulted in them paying over 2 and a half million pounds in compensation.
The Wonga board saw an exodus in 2014 including founder, Errol Damelin. Now, with changes being made to strengthen the board, they hope for a turnaround in their fortunes and a chance to redeem their reputation.