Budget Finance and Evolution Finance found guilty of 106 charges

Friday, 15 July 2016

Allan Hawkins from Cynotech says its is too early to decide if the judgment against two of his finance companies will be appealed.

Two finance companies have been found guilty on 106 charges of misleading debtors that they could make repossessions and add interest they had no right to.

The charges against Budget Loans and Evolution Finance, which are headed by director Allan Hawkins, were brought by the Commerce Commission under the Fair Trading Act.

The charges related to representations the companies made to 18 borrowers while enforcing loans originally made by National Finance and Western Bay Finance, two of the finance companies that collapsed between 2006 and 2012.

The loans, made between 2001 and 2006, were bought by Evolution Finance and Budget Loans for well below the face value of the loans because the likelihood of recovering the debt was low.

* Allan Hawkins' firm charged by Commerce Commission**

In a statement on its website, the commission said the companies misled consumers about their rights on four fronts.

The companies either repossessed or threatened to repossess borrower's property when they did not have a right to, the commission said

The companies also illegally added interest and costs to loan balances after borrower's property had been repossessed and sold.

Debtors were told they had to make loan payments at a higher rate than had been set by the courts.

Debtors were also told they had less time to remedy a loan default before their goods were repossessed than they were allowed under law.

Hawkins would not comment on the judgment.

The judgment would be reviewed. It was too early to say whether the companies would appeal, Hawkins said.

Commission chairman Mark Berry said the guilty finding sent a clear message to lenders about what they can and cannot do when seeking to repossess borrowers' property.

'Borrowers often do not understand their rights under the law and that makes it difficult for them to hold lenders to account,' Berry said.

'In this case it was budget advisors and community lawyers in Auckland that alerted us to the behaviour, enabling us to investigate and prosecute Budget Loans and Evolution Finance.'

It is the second time the commission has prosecuted Budget Loans, which like Evolution Finance, is part of the Cynotech group of companies.

In July 2010 the company admitted 34 charges of breaching the Fair Trading Act 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 in the Auckland District Court.

'The guilty verdict is pleasing and the public can be assured that tackling unlawful repossession activities remains a priority for us in our work enforcing credit and consumer laws,' Berry said.

However, 19 charges were dismissed relating to whether All Present and After-acquired Property clauses meant the finance companies were legally entitled to charge interest after items had been repossessed.

Berry said the commission planned to appeal to get the charges reinstated.