Andy Haste, the new Chairman of Wonga has an important year ahead and he intends to get his hands dirty raising the international profile of the now famous payday lender, Wonga and ensuring that people are properly educated about the type of service Wonga provides and the types of situations their loans ought to be used for.
Andy Haste: who is he?
Mr Haste has a notable corporate background. Described by some commentators as a ‘heavyweight City veteran’, Haste has headed up top-notch management teams in the past, including being the former Chief Executive of RSA and Axa Sun Life.
Plans for Wonga
So, what are his plans for Wonga? A hint of big changes afoot lies in Haste’s statement that Wonga has made some ‘mistakes’ in the past, so it is clear that he intends to introduce across the board changes for the brand. Moreover Haste has talked about creating a ‘sustainable future’ for Wonga suggesting that strategic change will go the very core of the Wonga brand.
Arguably, his task is similar to that of the management board of Mc Donald’s, which was pilloried in the press in the 90’s on account of how it can contribute to obesity in adults and children. Like Mc Donald’s, Wonga has taken a brave step in acknowledging that some change is required and that ethical questions and debates need to be addressed, openly. This is the first step in the road to successfully providing services that can be controversial in today’s ethically conscious world.
Haste intends to address the ethical questions that surround the issue of Wonga loans as well as other payday loans and he wants to highlight just how useful and legitimate the Wonga service is. He intends to scrap current advertising strategies and focus on transparency.
A major ‘open Wonga’ campaign has been mounted recently, which publishes statistics about the type of people using the Wonga service and their circumstances. These statistics highlight things like whether and what proportion of Wonga loan applicants have access to other forms of short-term credit like overdrafts and credit cards. Other factors addressed in the data published includes the marital status of applicants; the number of children typical loan applicants have and the success rate of loan applications.
Protecting young and vulnerable applicants
A major aspect of Haste’s plans are to ensure that young and vulnerable loan applicants are protected, and educated about the proper use of the loan facilities available. This goes hand in hand with current regulation being applied within the financial industry, but in many ways Wonga intends to go a few steps further and really create an ethical brand, that educates, explains and is transparent.
Protection of the young and vulnerable will be addressed through scrapping adverts that use puppets to explain the Wonga brand and the services it provides. It has been suggested that the use of puppets trivialises the brand and the whole process of taking out loans. Additionally it has been suggested that using puppets will appeal to the young and also to vulnerable people, and that this can be seen as irresponsible lending.
Haste has also hinted at a review of the current interest rates charged by Wonga. The issue of APR and interest charges has always been a thorny issue within the payday lending sector. Some payday lenders can have APR of over 3000% on some products, but as Haste suggests many people misunderstand what APR is, since it describes a loan rate over a period of a year, despite the fact that Wonga loans are short-term loans and are not designed to be repaid over a longer period, as most conventional loans are.
As such when you compare a loan that is intended to be repaid over a period of a year or longer with a typical Wonga loan, in terms of APR, there is a massive difference, but many people simply don’t understand that this is because Wonga loans are meant to be short term, and as such APR is perhaps not the best way to compare it with other loan products, since it is a unique product in a class of its own!
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