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

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news