Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Vehicle finance company fined for ‘vehicle-go-round'

Vehicle finance company and director fined for ‘vehicle-go-round.’

Mt Maunganui finance company MAC Warranties Ltd (MAC) has today been fined $42,250 in the Auckland District Court for 17 breaches of the Fair Trading Act (FTA). MAC’s director and shareholder Alan Spiers has been fined $22,750 for a further 11 breaches.

MAC has also agreed to provide $182,000 compensation to affected customers.

The charges, brought by the Commerce Commission, related to misleading claims made between 2008 and 2011 when MAC repossessed and sold 79 vehicles used as security for its loans.

Under repossession laws, MAC was required to make all reasonable efforts to obtain the best price when it sold the vehicles. However following repossession of each vehicle, MAC sold the car to its sister company Mount Autos Limited (of which Mr Spiers was also a director), implying to its customers that it had taken reasonable steps to get the best price, when it had not. MAC either sold the vehicles to Mt Autos at a price it had set itself, or simply used a third party valuation when other steps were available to get the best price.

MAC also sold 29 of these vehicles to Mount Autos before it had the right to do so. Under repossession laws, MAC could not sell those vehicles until at least 15 days after debtors had been served with a post-possession notice. This 15 day period gives debtors the chance to catch up on outstanding payments and get the vehicle back. In each case MAC sold the vehicles to Mount Autos within the 15 day period.

MAC also told two of its customers that their repossessed vehicles were "wrecks," or had been sold to the wreckers, when they were not. They had instead been sold to Mount Autos which reconditioned the vehicles and on-sold them.

In delivering her decision on MAC and Mr Spiers, Judge Cunningham accepted the Commission’s submission that this was reckless behaviour and broke the companies own rules regarding the valuation of vehicles.

“These misrepresentations were important, particularly because they were made to people on low incomes and therefore in socio-economic groups less likely to be apprised of their rights.”

“This sort of recklessness will not be tolerated and will incur significant monetary penalties,” said Judge Cunningham.

Commerce Commission Consumer Manager Stuart Wallace said this was unacceptable business practice.

“The credit repossession laws are intended to ensure that businesses that seize property do so in strict compliance with the law and recognising debtor’s rights. The conduct of MAC and Mr Spiers fell well short of what was required by law.”

“Making matters worse, many of MAC’s customers were beneficiaries or on low incomes. They may not have known their rights or have been a position to exercise them. They would have been heavily dependent on the accuracy of the information provided by MAC, when it was not correct in a number of respects.”

“In some cases this became a vehicle-go-round. Mt Autos sold cars to people who took funding from MAC. When MAC repossessed those vehicles they were sold back to Mt Autos and then resold to another customer, again financed by MAC.”

“Parliament is in the process of reforming the credit repossession laws. The Commission is keeping a close eye on the repossession industry, and will continue to take action where appropriate. Penalties can be significant if businesses get it wrong,” said Mr Wallace.

Steps have been taken to notify all affected debtors of any compensation/account credit due to them as a result of the conduct outlined above. However, if any of MAC's customers are uncertain as to whether or not their vehicle was one of the 79 to which the prosecution related, they can contact the Commerce Commission Contact Centre: contact@comcom.govt.nz or 0800 943 600.

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Finance: Major Campaign To End "Gross Overtaxation Of Savings"

The campaign – which includes a special web site through which New Zealanders can e-mail their own and other MPs and party leaders – is backed by Age Concern, Consumer NZ, the Financial Services Council and the Taxpayers’ Union. More>>

ALSO:

Scoop Business: Leighton-Led WGP To Build, Manage Transmission Gully

The Wellington Gateway Partnership, led by a unit of ASX-listed Leighton Holdings, has won the $1 billion contract to build the Transmission Gully road north of Wellington. More>>

ALSO:

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news