Finance Company Defaults
1.FINANCE COMPANY DEFAULTS CUSTOMER FOR OVERDUE ACCOUNT THAT WAS NOT OVERDUE
Mr. and Mrs. K were approached at home by a traveling salesman who convinced the couple to purchase a new roof for their house. As an enticement to sign up for the work the salesman offered a 12 month interest free package with a reputable finance company. The terms of the loan contract were such that the K’s did not have to make any payments until after the 12 month had elapsed at which time the loan reverted to monthly payments at an interest rate of 18%.
Mr. and Mrs. K signed up for the deal and duly had the work performed. However, eleven months later the K’s received a notice from the finance company demanding the immediate repayment of the entire loan. The K’s were totally surprised and had not been aware that they were required to payout the finance contract prior to receiving the notice. Nevertheless, the K’s contacted their bank and borrowed the required funds on top of their mortgage to payout the finance company.
About 18 months later the K’s decided to fit a new air-conditioning system into their house. Again they were attracted to a 12 month interest free offer which provided a deferment of the loan repayments for 12 months with no interest paid.
However, when they applied to the air-conditioning company’s finance provider they were shocked to discover they had been rejected due to a bad credit rating. After obtaining a copy of both credit reports from Baycorp Bureau they were horrified to discover a default from the finance company who had loaned them the money for the retiling of their roof 18 months previously.
After contacting the roofing finance company they were advised that the default had been published because they were in default of their obligations to repay the loan.
After being referred to Latham Moore through their mortgage broker, we investigated the circumstances and discovered 4 separate breaches of the Privacy Act 1988 and Consumer Credit Code 1995. These breaches included failing to issue a prescribed notice in the correct format and publishing a default before the statutory default period had expired.
After investigating the allegations the finance company removed the defaults and entered into confidential terms of settlement with the K’s.