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“Outrageous” conduct leads to indefinite banning order

23.05.12

“Fulsome” conduct leads to indefinite banning order for lender

The Commerce Commission has welcomed a banning arranged b fitting, the first of its kind issued under the Credit Contracts and Consumer Finance Act, which indefinitely prevents bankrupt and convicted fraudster Trevor Allan Ludlow from context up, operating or working in the consumer finance industry.

The banning order, as well as fines and reparation, were ordered in the North Shore Province Court following a case taken by the Commission against Takarunga Management Reduced, trading as Mortgage Rescue, and its director and sole decision maker Trevor Ludlow.

In supporting the Commission’s petition to ban Ludlow from working in the industry and agreeing that Ludlow was not a fit and proper person, Find Hinton observed that in his view Ludlow “lacked the skills to be in the industry” and did not “grandeur the integrity and fair dealing that is appropriate in this type of dealing.” His Honour said that Ludlow’s feedback to borrowers cancelling their contracts or disagreeing with him was “clearly unlawful and in the circumstances, egregious”.

“The type of credit contract Mortgage Rescue was offering was targeted at vulnerable people. Homeowners who have fallen on straight times and need to refinance or face mortgagee sale are particularly vulnerable and have the to be fair to the full protection of the law,” said Graham Gill, Competition Manager. “This is the order of behaviour that demonstrates why the Credit Contracts and Consumer Finance Act and the Fair Trading Act occur to protect consumers. Mr Ludlow’s conduct was very poor and we are pleased that he has been removed from the earnestness as this was a key reason for the prosecution,” said Mr Gill.

The Commission prosecuted Mortgage Rescue and Ludlow under both the Acknowledge Contracts and Consumer Finance Act (CCCF Act) and the Fair Trading Act, in relation to consumer credence contracts entered into with two families. Mortgage Rescue offered homeowners in financial dissension temporary finance to stave off mortgagee sales. The company encouraged homeowners to take more than was required to pay their arrears, so they could carry out renovations to their homes. Mortgage Rescue’s ambition was that in addition to acting as a financier, they would also be paid to carry out the renovations.

In the first of the two cases, the borrowers cancelled the roll oneself the day after they entered into it, as they were legally entitled to do. Mortgage Rescue charged a $5,000 cancellation fee , and charged a $1,500 legit fee when it had only paid $675 for legal services. Both the company and Ludlow were convicted of charging an nonsensical cancellation fee and the company was convicted of not passing on the legal fee at cost, as the CCCF Act requires.

In the twinkling case, the loan and renovations went ahead, but Mortgage Rescue tried to convalesce more than the loan amount for the work it had carried out on the property. Mortgage Rescue issued a default make out and sold the property. The Judge found that Mortgage Rescue had misrepresented the amount that it could recover, as it had not disclosed any permuting to the loan amount. Also Mortgage Rescue had no right to charge a services fee as it had not arranged a refinance, and it had served the come up short notice before it was legally entitled to make a demand for payment. Mortgage Rescue was convicted of all three charges and Ludlow on two of the three.

Believe Hinton imposed fines of $29,000 on Mortgage Rescue, and $1,000 on Ludlow. Ludlow’s brilliant reflected the fact that he is currently serving a prison sentence so is unable to qualify for and income, and has substantial debts. Both Mortgage Rescue and Ludlow were ordered to pay reparation to the borrowers of virtually $24,000. Ludlow has been ordered to start making these payments two months after he is released from reformatory.

The judgment is available on the Commission’s website at www.comcom.govt/consumercredit-enforcementoutcomes

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Takarunga Management Limited was incorporated in May 2006 to assist in the receivership of another funds company. It then branched out into mortgage lending and operated under the trading name Mortgage Rescue, using that name on its advance documentation. The company only entered into four consumer credit contracts and no longer trades. Trevor Allan Ludlow was one of two directors and was the solitary business generator and decision maker of the company. Earlier this year Ludlow was convicted of double-dealing charges and is currently serving a term of imprisonment for this offending.

The Credit Contracts and Consumer Wealth Act 2003 regulates consumer lending, consumer leases and buy-back transactions, requiring the disclosure of dependable information to consumers entering into consumer credit contracts and providing rules that delineate to interest, payments and credit fees.

Under Section 30 if a contract is lawfully cancelled, the debtor is only obligated to pay any reasonable expenses necessarily incurred by the creditor in connection with the contract and its abolition. The debtor is not liable for any other fees.

Under Section 45 a fee charged to reimburse an amount paid by the creditor to another living soul must not exceed the actual amount paid by the creditor.

Section 108 empowers the Locality Court to prohibit or restrict a person’s involvement in the credit industriousness in certain circumstances and where the Court is of the opinion the person is not a fit and proper person to penetrate consumer credit contracts as a creditor.

Under the Fair Trading Act 1986 it is an crime to make a false or misleading representation. This includes representations made about the right to on a contract or to charge particular fees.

Source: Scoop.co.nz (press release)