Auto-finance firm to repay overcharged customers

Photo / Sarah Ivey

More than 800 customers of a consumer loans company will get back $3.3 million after they were overcharged for interest and fees, says the Commerce Commission.

The regulator believes Auckland-based Broadlands Finance is likely to breached the Fair Trading Act but has reached a settlement with the firm, which admits no liability.
The settlement, however, means that 807 customers will get $3.3 million back, an average of $4000 each.

Broadlands, owned by Tony Radisich, mainly offers motor vehicle finance but according to the commission it charged interest and fees after it had sold repossessed property, which is banned under the Credit Repossession Act.

This law prohibits lenders from recovering more than the balance which owed after goods have been repossessed and sold.

"In the Commission's opinion, Broadlands misled its customers by representing that it had a right to continue to charge interest and fees," the regulator said today.

The regulator began probing Broadlands in 2012 and reached a settlement with the firm last month, with the lender also given undertakings which the commission can enforce in court.

The commission said today it was the first time it had got court-enforceable undertakings.

Commission chairman Mark Berry said he was pleased Broadlands was compensating customers but that there were still "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 this industry needs to further tidy up its practices. The stakes are now a lot higher for those who do not comply, with recent increases in the penalties for breaching the Fair Trading Act. We will continue to be highly active in this area to ensure that businesses are complying with the rules and that consumers are protected," he said.

The Commission highlighted settlements reached with Baycorp and Geneva Finance and prosecutions against Budget Loans Limited for breaches of the Fair Trading Act.