Budget Loans fined $720,000 for illegal repos

Former high-flier Allan Hawkins owns both companies fined today.

Finance company Budget Loans has been stung for $720,000 in fines after lying to borrowers and illegally repossessing their cars, beds and fridges. 

Auckland District Court Judge David Sharp today also ordered the company to pay $53,000 in reparations and $38,000 in refunds and credits to borrowers. 

Judge Sharp says the actions of the company, which is a combined entity of Budget Loans Ltd and Evolution Finance Ltd, were "cynical and deliberate."

Budget Loans was fined $478,000 and Evolution Finance was fined $200,000 by Judge Sharp. The rest went towards reparations for the 21 victims. Both companies are owned by Allan Hawkins, the former Equiticorp boss who was jailed in 1992 for six years for fraud.

The Commerce Commission, which brought 125 charges under the Fair Trading Act, is taking separate legal action against Mr Hawkins and his son Wayne, who was a director of Budget Loans. The commission is also seeking further compensation for all victims affected by the finance companies in civil proceedings. 

"This is particularly outrageous offending. It has been of immense concern to the commission from the beginning," the commission's prosecutor, Alysha Mcclintock, says. 

Budget Loans and Evolution Finance were found guilty of guilty of 106 breaches of the Fair Trading Act in July 2016.

The court today heard details from victim impact reports, including illegal repossessions used to punish borrowers, which Judge Sharp described as “hard to read.”

Repo agents take everything
On one occasion an agent was ordered by Budget Loans to “fully clear the house out.” 

In other cases, Budget Loans agents were told to fill up their vans and to prioritise taking essential items like cars, refrigerators, washing machines and beds. Often these items were of little value and were thrown out by agents.

One victim whose house was ordered by Budget Loans to be completely cleared out by its agents had five children.

Another borrower had overpaid a loan by $3500 but was told by Budget Loans they owed more than $10,000, a figure that was not corrected by the company.

Budget Loans also falsely marked borrowers' property as "at risk" to justify repossessions. 

The defence had argued the company was acting within the law in seeking debt payments and asked for a fine of no more than $200,000 because of the negative press Budget Loans had suffered and its co-operation with the investigation.

Judge Sharp responded by saying: “I can’t see how you can responsibly argue that this is not an extreme case … it far outweighs any other case I have seen.”

"Having purchased bad debts, the defendants' strategy was to get borrowers paying as much as possible for as long as possible."

He says the defendants needed to be held to account and deterred from further illegal activities.

In December last year, Commerce and Consumer Affairs minister Kris Faafoi announced a review of the Credit Contracts and Consumer Finance Act, citing concerns around responsible lending. 

History of crime
In July 2016 Budget Loans and Evolution Finance was found guilty of representations made to 21 borrowers while enforcing loan contracts.

The financers convinced the court to dismiss 19 charges but these were successfully appealed by the Commerce Commission in April last year. In November the Court of Appeal dismissed an application for leave to appeal from the companies.

In 2010 Budget Loans was fined about $31,000 for breaches of the Fair Trading Act and returned about $500,000 in interest and fees overcharged to borrowers.

Another of Mr Hawkins' company's, Budget Loans Group, which was a major funder of Budget Loans and Evolution Finance's parent company, was put into liquidation in 2013.


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15 Comments & Questions

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Enough is enough

Close these companies down or prohibit the companies and individuals from operating in the finance sector. They are cowboys and have had more than enough chances to tidy up their act.

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Al should make a move on Kelly Tarlton's; there's kith and kin in them thar tanks. He'd be right at home.

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Sickening. Remind me - what does our court system do to people who take all the valuable things from peoples houses?

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Under the new sentences laws that the Labour govt proposes to bring in, the answer to your question will be home detention. Or in other words... nothing.

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What next for Hawkins? a knighthood maybe. Only in NZ. Anywhere else this guy would be struck off for life at the very least.

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I think the days of allowing this clown to continue to operate must be numbered.
Im sure he has made a fortune and what the Court does to him is totally out of proportion to the hardship he must have caused families.
But it is not all Hawkins.
Some of these families live on credit as a modus operandi and scream hardship for no justifiable reason.
They get hand outs which are spent on needless things and make no attempt to improve their lot.
We need as a nation to put an end to the constant woe is me attitude and get back to the number eight wire mentality we used to have and make live work with what we have got not want we want..

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Yes indeed!
Absolutely true!

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What is "number eight wire" Anonymous? I think it might be a uniquely Kiwi term that I have, as yet, not come across!
I have to agree with you about "some families live on credit (debt) and spend on needless things (bling)" I came across this during my brief, but educational, stint as a debt collector. I well remember one company that specialised in selling "mag wheels" to teenagers who, to put it mildly, were not "financially literate." One of their tricks was to inflate the purchase price and create "a fictitious down payment" thereby enabling 100% financing on an immediately depreciated asset, if one could call mag wheels an asset. They also, of course, made sure that the borrowers took out the insidious PPI (Payment Protection Insurance), a favourite and very good earner for lenders. evidence of the vast scale on which this was "mis-sold" (a wonderful word) has been shown in the Finanical Service Commission in Australia, but it pales into total insignificance when compre to the FORTY BILLION POUNDS refunded by UK banks .

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Nother aspect of the PPI and why its is so popular with lenders is that 1005 of the premioum for the term of the loan is added to the loan at the outset and interest charged on it. I regulalry saw premiums of $500.00 and up in my debt collecting days. Many loans were discharged early, for one reason or another, but the borrowers had forgotten about the insurance and never claimed a refund. The result was, of course, that the sellers (lender and store) kept the unearned commission and the insurance company, probably owned by the lender, in the case of banks, kept the unearned premium. Really nice little,actually BIG, earner eh?

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OOOOOOOOOOPS Typo! should have been "100%" not "1005." Sorry

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I was interested in the paragraph about “Having purchased bad debts, the defendants’ strategy was to keep borrowers paying as much as possible for as long as possible.” From my understanding, and reading the Contracts (Privity) Act 1982, which I just learned was repealed and replaced with Contract and Commercial Law Act 2017, a contract can have only 2 parties. “Sub Part 1 – Contractual Privity, The purpose of this subpart is to permit a person who is not a party to a deed or contract to enforce a promise made in it for the benefit of that person”of the new Act seems to confirm that UNLESS there is a “named promisee” a third party is not a party to the contract. It would seem to me that unless “Budget Loans” was a promisee in the bad debts that they bought, they could not enforce/collect the debt because they had no contract with the debtor and vice versa.
Any thoughts/comments anybody? (Edited)

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I would put money on it that the contracts purchased by Budget would have had an assignment clause. All pretty standard so lenders can sell their loan books from time to time.

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Thanks for your reply Mark.
From what the statute appears to say, a simple "assignment clause" wouldn't cut it. The following is very specific 12 Deed or contract for benefit of person who is not party to deed or contract
(1)This section applies to a promise contained in a deed or contract that confers, or purports to confer, a benefit on a person, designated by name, description, or reference to a class, who is not a party to the deed or contract.
(2)The promisor is under an obligation, enforceable by the beneficiary, to perform the promise.
(3)This section applies whether or not the person referred to in subsection (1) is in existence when the deed or contract is made.
I have had 2 go rounds with the same debt collector on the same "supposed" debt. They harrassed me by phone and by mail, threatened me, gave me a certain time to pay, exactly the same procedure on each occasion. I kept asking them if I had a contract with them and, if so, to please provide a copy. They DIDN'T, because they COULDN'T because there wan't one (a contract) and eventually went away. I would have thought that the same, or similar, would have applied to the bad debts that Budget Loans bought. What do you think?

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Good afternoon Geoff.

Beneath all the legalese there is the matter of intent - "and it would seem that there is at least the possibility of the existence of criminal intent, Old Boy. Is the chap a member of the Club? I believe so. He's a Country member"

If you see what I mean:

Among the younger generation there is growing recognition that the jargon of the past can no longer contain the problems it created. Contempt is rife throughout the system.

Our Nation has been polarized and fragmented and it will take not just a bipartisan approach but also an intelligent, non-patronizing, restrained-ego form of approach to preserve what remains of New Zealand's democracy.

And recent indications are that the clean-up, or clean out, needs to start in the legislative chamber.

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I wonder if any of the $38,000.00 in refunds and credits was in respect of PPI premium refunds.

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