By Mark Kleinman, City Editor
Wonga, the under-fire payday lender which is facing a possible police investigation into its business practices, is turning to a member of the City establishment in a bid to transform its reputation.
The company announced on Monday that Andy Haste, a former boss of the insurer RSA, is to become its new chairman just days before the City watchdog unveils a formal cap on the level of interest that can be charged by providers of fast credit.
Speaking to Sky News, Mr Haste said his urgent priority was to rebuild customers' trust by making Wonga "more transparent".
He will conduct an immediate review of the company's customer base and its product offering "to ensure that the group is lending only to customers who can reasonably afford to repay their loans," the company said.
Mr Haste will be paid £500,000 a year during an initial phase while Wonga seeks a permanent chief executive, after which his annual salary will be reduced to £300,000.
"I want to ensure that the business operates responsibly while providing an effective and reliable service for our customers. I have a clear mandate from the shareholders in Wonga to lead that process, both in the UK and across our international operations," he said.
Mr Haste's appointment comes less than a month after Wonga was ordered to pay £2.6m by the Financial Conduct Authority to compensate customers who were sent letters from fake law firms demanding that they repay their loans.
The disclosure that Wonga had created fictitious law firms sparked outrage and prompted demands for a full-blown criminal inquiry.
The battered image of the sector was reinforced on Monday when the FCA said that Dollar, which trades in the UK as The Money Shop, had agreed to refund more than £700,000 of interest and default charges to 6,247 customers who had received loans which exceeded Dollar's own lending criteria.
Mr Haste said he had undertaken extensive due diligence on the company before deciding to accept the role, but said he could not rule out the emergence of further reputational scandals.
"I have asked all the questions I can think of asking, and I believe I've been made aware of everything," he said.
"Time will tell whether that's the case."
He said he had accepted the role because his 30-year career in finance had convince him that there was a "need and demand" for short-term credit providers.
"The sector and the company need real change if they are to have a sustainable future," he told Sky News.
Mr Haste stepped down as RSA's chairman in 2011, and now serves as deputy chairman of the Lloyd's of London insurance market and a director of ITV, the commercial broadcaster. He was also a candidate to chair TSB, the bank which was recently spun out of Lloyds Banking Group.
The FCA will announce plans for a cap on the cost of payday loans later this week, although sources said reports that the ceiling would be £30 for each £100 borrowed were not accurate.
Last week, it emerged that the Church of England's pension fund had disposed of an indirect holding in Wonga, the existence of which had caused embarrassment to Justin Welby, the Archbishop of Canterbury.
Mr Haste replaces Errol Damelin, Wonga's founder, who recently stepped down following disagreement with the company's shareholders about its future.
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