Tuesday 7th October 2014
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Broadlands Finance, the auto-financier company owned by Tony Radisich, will repay customers $3.3 million in overcharged fees and interest as part of a settlement with the Commerce Commission.
The Auckland-based lender was found to have breached section 35 of the Credit (Repossession) Act when it charged interest and fees following the sale of repossessed property, as well as breaching the Fair Trading Act when it misled customers that it had the right to do so, the regulator said in a statement. The commission began investigating Broadlands in 2012.
The finance company will repay 807 customers in a combination of cash payments and credits to accounts and has given undertakings about its future conduct, which the commission can enforce through the courts. This is the first time the commission has obtained court-enforceable actions, which were introduced as part of recent consumer law reform.
"Broadlands cooperated with the investigation and has undertaken a lot of work reviewing its customer loan files to ensure that refunds have been correctly calculated," chairman Mark Berry said. "Unfortunately we do see real problems in the debt collection and repossession industry. We have brought several enforcement actions in recent times and have good reason to think that the industry needs to further tidy up its practices."
The commission entered into settlements with Baycorp (NZ) last December and Geneva Finance in 2007 and prosecuted Budget Loans in 2010 over similar breaches to the Fair Trading Act. It also prosecuted MAC Warranties earlier this year for its repossession and debt collection practices, the regulator said.
"From now on we expect enforceable undertakings to be a feature of commission settlements involving breaches of the Fair Trading Act," Berry said. "We will continue to be highly active in this area to ensure that businesses are complying with the rules and that consumers are protected."
Broadlands offers personal and business loans. In the year ended March 31, 2013 it recorded a loss of $4.1 million, from a profit of $43,811 a year earlier. The company had 2,238 loans, of which 98 percent were car-related and the remaining was property, worth an average of $8,403, giving it an estimated loan book of $18.8 million, according to financial statements lodged with the companies office. Radisich owns the company through a 71 percent stake in his name, and the remaining through a holding company called Timberton Investments.
In July this year, international ratings agency Standard & Poor's affirmed a B-/C rating on the company, with a negative outlook. The rating was withdrawn at the request of the issuer and Broadlands had paid off all debenture and shareholders loans, was reviewing its business strategy and had written off a large portion of its legacy loan book, the rating agency said.
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