Fees charged in 'biblical' proportions

Luke Atkins. Photo / Supplied

A savings scheme is charging clients more than $1000 a year in fees on savings of as little as $5000. The scheme, called Noah's Ark, is promoted by comparing it with the biblical account of the deluge.

Its contract states: "In the biblical story, Noah's Ark provided safety from the flood. The Noah's Ark Home Programme provides safety for your home deposit savings."

Noah's Ark Ltd, owned by Luke and Olga Atkins, promises to protect clients' savings by forgoing access to their money for five years. But it has been criticised by budget advisers, who say there is not enough detail in the contracts.

Clients are told they have to save a minimum of $50 a week while paying fees of $20 a week. The fees are collected at the end of the five-year period.

The contract promises a $5000 "kick-start" to those who sign up to the savings plan, although clients receive that money only if they buy a house through Noah's Ark.

The contract also states there is no guaranteed interest on savings and that "any such interest or fee rebates received is a bonus".

The Herald on Sunday spoke to a client of the company who has saved $1000. He said he met a company representative twice over six months and was told he needed to reduce his debt to buy a house.

The existing saving level meant it would take about 15 years to save the deposit for a house.

The man said he contacted Noah's Ark after hearing an advertisement on Radio Samoa in which the company was described as helping low-income people to buy homes.

The Herald on Sunday visited the offices of Noah's Ark in Mt Wellington.

Luke Atkins said the five-year bar on accessing money meant savings were protected from family members. He said clients saving $50 a week were "never going to get there" but it was intended that they would increase the amount once their debts were reduced. The money earned interest at about 3 per cent and the waiver of interest earnings was in case the BNZ changed the rate.

But Mangere Budgeting Services financial adviser Lezanne Gibbs said the contract showed that four missed payments led to a saver's scheme being put on hold and that "five years is long time to commit $50 a week".