Commerce Commission wins on Hawkins' finance company breaches

Finance companies Budget Loans and Evolution Finance, run by convicted fraudster Allan Hawkins, have been found guilty of more than 100 breaches of the Fair Trading Act.

The Commerce Commission announced this afternoon the two companies were found guilty in the Auckland District Court on 106 charges.

The commission started proceedings against the companies in December 2014, alleging they misled consumers about their rights. The companies were subsequently found guilty of representations made to 21 borrowers while enforcing loan contracts.

This included repossessing or threatening to repossess borrowers' property when they did not have a right to repossess, adding interest and costs to loan balances after the borrowers' property had been repossessed and sold.

The two companies also told debtors they had to make loan payments at a higher rate than had been set by the court, and told  debtors they had a shorter time to remedy a loan default before their goods were repossessed than they were allowed under law.

The two companies are directed by Allan Hawkins and Wayne Hawkins. They purchased old loan books from a number of failed finance companies including National Finance and Western Bay Finance, and most of the loans originate between 2001 and 2006. 

Allan Hawkins is the former boss of Equiticorp, which collapsed after the 1987 sharemarket crash, leading to his imprisonment on fraud charges in 1992.

Commerce Commission chairman Mark Berry says the guilty finding sends 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. 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.”

“The public can be assured that tackling unlawful repossession activities remains a priority for us in our work enforcing credit and consumer laws. We are committed to ensuring that lenders and other parties comply with credit contract laws throughout the full life of a loan – including when the borrower has fallen into default.”

The Commission filed 125 charges against Budget Loans and Evolution Finance. The defendants sought to have 122 of those charges dismissed at a hearing in May.

The court ruled this month that 19 charges should be dismissed due to a lack of certainty about the circumstances in which a lender could continue to charge interest and costs, after repossessing and selling consumer goods under a continuing security agreement. 

However, the commission intends to appeal this ruling and will seek to have these 19 charges reinstated.

This is the second time the commission has prosecuted Budget Loans. In July 2010 it 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.

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