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Auckland finance companies face criminal proceedings

Commerce Commission files criminal proceedings against Auckland finance companies


The Commerce Commission has filed criminal proceedings in Auckland District Court against finance companies Budget Loans Limited and Evolution Finance Limited, alleging their repossession and debt recovery practices breached the Fair Trading Act.

Budget Loans and Evolution Finance are charged with misleading debtors, including by:

• repossessing or threatening to repossess debtor’s property when they did not have a right to repossess;

• adding interest and costs to loan balances after debtors’ property has been repossessed and sold;

• telling debtors they have to make loan payments at a higher rate than has been set by the Court; and

• telling them that they have a shorter time to remedy a loan default before their goods are repossessed than they are allowed under law.


The Commission’s view is that the companies’ conduct breached the Fair Trading Act 1986.
Commerce Commission Competition General Counsel Mary-Anne Borrowdale said it is concerning that Budget Loans is again facing criminal charges, having admitted 34 charges under the Fair Trading Act in 2010.

“Ultimately it is now for the Court to decide whether the evidence shows that Budget Loans’ and Evolution Finance’s conduct was illegal. However, all finance companies should be aware that we are paying close attention to their conduct and won’t hesitate to act if we believe they are misleading debtors about their rights and obligations,” Ms Borrowdale said.

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Background

The directors of Budget Loans Limited and Evolution Finance Limited are Allan Hawkins and Wayne Hawkins. Evolution Finance and Budget Loans purchased old loan books from a number of failed finance companies including National Finance Limited, Western Bay Finance Limited and Equality Finance Limited. The majority of loans originate between 2001 and 2006.

In July 2010 Budget Loans Limited admitted 34 charges of breaching the Fair Trading Act 1986 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. See the media release here.

The Commission started the current investigation into Budget Loans and Evolution Finance in 2012. The Commission issued a “Stop Now” letter to the two companies in November 2013 with regard to one aspect of their conduct while its investigation continued. See the media release here. The charges filed include the conduct outlined in the “Stop Now” letter, as well as further conduct the Commission investigated.


ends

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