The Commerce Commission has filed criminal proceedings in the Auckland District Court against 2 finance companies controlled by former Equiticorp boss Allan Hawkins, Budget Loans Ltd & Evolution Finance Ltd, alleging their repossession & debt recovery practices breached the Fair Trading Act.
The commission has charged the 2 companies with misleading debtors, including by:
- repossessing or threatening to repossess debtors’ property when they did not have a right to repossess
- adding interest & costs to loan balances after debtors’ property had been repossessed & sold
- telling debtors they had to make loan payments at a higher rate than had been set by the court, and
- telling them they had a shorter time to remedy a loan default before their goods were repossessed than they were allowed under law.
Commerce Commission competition general counsel Mary-Anne Borrowdale said today it was concerning that Budget Loans was again facing criminal charges, having admitted 34 charges under the Fair Trading Act in 2010.
Allan Hawkins & his son Wayne Hawkins are the directors of Budget Loans & Evolution Finance, which bought old loan books from a number of failed finance companies, including National Finance Ltd, Western Bay Finance Ltd & Equality Finance Ltd. Most of the loans originated between 2001-06.
In July 2010, Budget Loans admitted 34 charges of breaching the Fair Trading Act by charging interest & fees after it had repossessed & sold items of security on National Finance loans. It agreed to make substantial repayments and was fined $30,750 in the Auckland District Court.
The Commerce Commission started the current investigation into Budget Loans & Evolution Finance in 2012. It issued a “Stop now” letter to the 2 companies in November 2013 with regard to one aspect of their conduct while its investigation continued. The charges filed include the conduct outlined in the “Stop now” letter, as well as further conduct the commission investigated.
Mr Hawkins headed the listed Equiticorp Group, which was placed in the new insolvency control of statutory management in 1989 after collapsing in the wake of the 1987 sharemarket crash. The Serious Fraud Office prosecuted Mr Hawkins & other Equiticorp directors and he was sentenced to a 6-year jail term in 1991. He was released in 1995.
He controls Budget Loans & Evolution Finance through formerly NZX-listed Cynotech Holdings Ltd and the private company which bought out other Cynotech Holdings investors, Cynotech Securities Ltd.
Cynotech Holdings took over the NZX-listed Rocom Wireless Ltd in 2004 and sold out of all information & domestic telecommunications-related interests to focus on satellite communication and satellite phone sales & rentals, finance lending and merchant banking fee-based activities.
Trading in Cynotech Holdings securities was halted in July 2013 after the company told the NZX its major shareholder & other close funding supporters had decided they would no longer pay its overhead & infrastructure costs. Liquidators Peri Finnigan & Tony Maginness were appointed at the end of that month, but were replaced I November 2013 by Derek Farrelly, now of Rotorua.
9 November 2013: Commission tells Allan Hawkins’ finance companies to stop repossessions
31 July 2013: Hawkins goes to McDonald Vague for Cynotech liquidation
11 July 2013: Cynotech share trading halted after backers end support
15 June 2011: Cynotech loss increases as it clears decks
28 July 2010: “Welcome letter” from Hawkins’ Budget Loans to National Finance borrowers came with an illegal $15 fee
20 January 2010: Hawkins renews Cynotech privatisation bid
9 July 2008: Hawkins says conservative policy wins for Cynotech
21 April 2008: Cynotech doubles receivables book to $60 million-plus in 4 months
Attribution: Commission release.