High noon for the repo men

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Debt collectors and repo men need to clean up their act says the Commerce Commission, which next year gets new powers to directly crack down on shoddy practices.

Commission chairman Mark Berry said the regulator had its eye on issues in the debt collection industry after yesterday announcing a settlement with Broadlands Finance, a consumer lending business owned by Tony Radisich. Broadlands, which offers motor vehicle finance, charged customers interest and fees after repossessed property had been sold, a commission investigation found.

This is banned under the Credit Repossession Act.

The Auckland-based financier admitted no liability, however the settlement means that 807 Broadlands customers will get back $3.3 million that they were overcharged in fees and interest.

Just over $260,000 is due to be repaid to customers while $3.04 million would be credited back to Broadlands client accounts, reducing the amount these people owed.

Berry said the commission doesn't technically enforce the Credit Repossession Act and instead alleged Broadlands had breached the Fair Trading Act.

But from next year the commission will get more direct powers to regulate this industry when consumer law changes come into effect. "We get powers of enforcement in relation to this very kind of conduct ... we won't have to use the Fair Trading Act route to get there," he said.

Credit organisations will also need to be registered, which will mean the commission is better informed.

The maximum penalties for breaches have also been beefed up to $600,000 for businesses and to $200,000 for individuals, he said.

As well as charging interest after goods had been sold, Berry said, some in the industry had not been giving adequate notice before selling repossessed property or taking all the necessary steps to get the best price.

"Unfortunately we continue to see real problems in the debt collection and repossession industry," Berry said. "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 commission chairman said the regulator would try to educate the community where lenders didn't understand the law but that it would exercise its prosecution powers if there were problems.

Broadlands did not respond to a request for comment yesterday.