Firms taken to court

The Commerce Commission has filed criminal proceedings against Budget Loans and Evolution Finance alleging their repossession and debt recovery practices breached the Fair Trading Act (FTA). The two finance companies have been charged in Auckland District Court with misleading debtors, including by repossessing or threatening to repossess their property when they didn’t have a right to take this action, and adding interest and costs to loan balances after borrowers’ property had been repossessed and sold. The commission also alleges Budget Loans and Evolution Finance told consumers they had to make loan payments at higher rates than been set by the court, and telling them they have a shorter time to remedy defaults before goods are repossessed than the law permits. The commission’s view is the companies’ conduct has breached the FTA. Mary-Anne Borrowdale, general counsel for competition, says it is concerning Budget Loans is again facing criminal charges having admitted to 34 charges under the FTA in 2010. “It is now for the court to decide whether the evidence shows that Budget Loans’ and Evolution Finance’s conduct was illegal,” says Borrowdale. “However, all finance companies should be aware we are paying close attention to conduct and won’t hesitate to act if we believe they are misleading debtors about rights and obligations.” The directors of Budget Loans and Evolution Finance are Allan and Wayne Hawkins. The two companies bought old loan books from failed finance companies – including National Finance, Western Bay Finance and Equality Finance – with most originating between 2001 and 2006. In July 2010, Budget Loans admitted 34 charges of breaching the FTA by charging interest and fees after it had repossessed and sold items of security on National Finance loans. It agreed to make substantial repayments and was fined $30,750. The commission started its current investigation into Budget Loans and Evolution Finance in 2012. It issued stop-now letters to them in November 2013 with regard to one aspect of conduct while its investigation continued. Charges filed include conduct outlined in the stop-now letter and further matters the commission have investigated.