Wonga hires insurance firm executive to help restore tattered reputation

Britain's biggest payday loans company, Wonga, has hired an executive from the insurer RSA to help restore its tattered reputation.

Tara Kneafsey, a former management consultant who has been with RSA for eight years, has been charged with helping the recently appointed chairman, Andy Haste, to "re-present Wonga to the public". The appointment follows vociferous criticism of the loans company's business model and the recent scandal involving fake legal letters designed to pressure borrowers to pay back their loans.

Kneafsey, 39, will run the UK consumer division, working alongside Haste to ensure Wonga "lends only to customers who can reasonably afford to repay their loans", said a spokesman. She will also be reviewing its advertising strategy.

One of Haste's first announcements on taking up the reins in July was that the controversial grandparent puppets used in the company's TV adverts would be dropped as part of an attempt to clean up Wonga's act.

Founded in 2006, Wonga has long come under fire for its sky-high rates – it offers short-term loans at an annualised interest rate of 5,853%. The Church of England has condemned the company as "morally wrong" and pledged to compete the industry out of existence by boosting credit unions, while politicians such as Labour's Stella Creasy have labelled its activities "legal loan sharking".

But the company suffered its biggest blow in June when the Financial Conduct Authority found it guilty of unfair and misleading debt-collection practices, including sending letters to struggling borrowers in the names of made-up law firms "Barker & Lowe" and "Chainey, D'Amato & Shannon". Wonga was ordered to pay compensation of more than £2.6m to about 45,000 customers.

A few days before the FCA announcement, it emerged that one of Wonga's founders, Errol Damelin, had quit as a director of the company, seven months after stepping down as chief executive. Weeks earlier, Niall Wass, who replaced Damelin as chief executive last November, announced he was quitting.

Kneafsey, who will start her job as managing director of Wonga's UK consumer loans business later this year, indicated the scale of the challenge ahead, saying: "It is clear the business needs to evolve significantly to become an accepted part of the financial services landscape."

She added: "I am pleased to be joining Wonga at such a pivotal time for its UK business. There is undoubtedly a genuine demand for short-term credit."

Haste said Kneafsey had "a proven record in putting businesses on the right track" and would be instrumental in "returning Wonga to its original vision – providing short-term loans to the right customers in a responsible and transparent way".

Kneafsey's very first job was as a cashier in an amusement arcade – in a 2012 interview she claimed she "became a bit too good at gambling on the poker machines" – and she studied physics to master's level. She started her career as a management consultant before joining RSA in 2006, and most recently led the insurer's UK small-business division.