A pre-possession notice goes astray

The complaint

In late March 2015, Leighton contacted FSCL about a complaint against a finance company, Helpful Finance. Leighton was in poor health, having suffered from cancer for some time. Leighton was concerned about the interest accruing on his loan, and he had recently received a pre-possession notice from Helfpul Finance stating that he owed it $5,800.

Leighton said he felt as though Helpful Finance was ‘treating him like a criminal’ even though he was a good customer. Leighton said the balance of his debt to Helpful Finance was too high and that he was charged too much interest on a $40,000 loan he had taken out in 2010. Leighton wanted Helpful Finance to agree to accept reduced payments at $350 per week, down from $440 per week.

Leighton said that a repossession of his boat and vehicle in April 2014 was illegal because he had not been provided with a pre-possession notice. Leighton said Helpful Finance’s repossession agent had assaulted him, but he did not report the alleged assault to the Police.

Leighton wanted the repossession costs reversed from his loan balance (around $2,600), and for Helpful Finance to pay for motel costs he incurred (as he had been living on the boat which was repossessed), of around $1,900. Leighton said that Helpful Finance did not treat him fairly during the repossession process in 2014, because:

a)      it did not contact him personally about the proposed action, (it contacted his lawyer), and

b)      Helpful Finance knew he was living on the boat when it took repossession action.

 

Helpful Finance’s file

Helpful Finance’s file showed that Leighton’s lawyers had assisted him in arranging the loans. Leighton’s lawyers also held his funds in its trust account, and his scheduled payments were originally paid directly to Helpful Finance by the lawyers.

However, Leighton’s relationship with his lawyers broke down and there were some missed / reduced payments in 2013. In addition, during the period June 2014 to March 2015 Leighton missed around 14 payments.

 

The 2014 repossession

In May 2014, Helpful Finance repossessed Leighton’s boat and vehicle. Leighton said he had spoken with Paul at Helpful Finance the Friday before the repossession action took place on Monday, and had told Paul he was due to get a payment from the IRD and could make payment very soon. Leighton said that Paul should have told him on the Friday that Helpful Finance was looking to take repossession action.

Helpful Finance sent a pre-possession notice to Leighton’s lawyers (Leighton’s address on the credit contract) dated 12 March 2014. Leighton said that Helpful Finance should have sent the pre-possession notice to him personally. Leighton said his lawyers did not tell him about the pre-possession notice.

 

FSCL’s review

Our preliminary view that Leighton’s complaint should be discontinued.

 

Balance of the account

We reviewed the history of Leighton’s loans with Helpful Finance, and concluded that the current balance of Leighton’s debt was correct. In particular we looked at the interest Helpful Finance had applied to the $40,000 he took out in 2010 and found no evidence that Helpful Finance had charged interest incorrectly on this loan.

 

Reduction in weekly payment amount

Helpful Finance agreed to reduce Leighton’s weekly payment amount to $350. Leighton confirmed to our case manager on several occasions that he was going to go into Helpful Finance’s offices to sign the paperwork, but it was unclear whether he did this.

 

Assault

We said there was insufficient evidence of the alleged assault, and that Leighton should have reported it to the Police.

 

Repossession

We outlined to Leighton that it appeared his lawyers must have received the pre-possession notice issued in 2014, because a post-possession notice was sent to the lawyers stating that $13,280 needed to be paid by Leighton immediately, and payment was then made. We told Leighton he may wish to raise with his lawyers why they did not tell him about the pre-possession notice.

On the evidence we were of the view that Leighton was adequately informed of the repossession and that Helpful Finance was unaware he was living on the boat.

 

Unfair treatment

In our view, Leighton’s history of missed payments indicated to Helpful Finance that Leighton was having trouble making payments. We thought Helpful Finance could have taken more proactive steps to discuss Leighton’s payments with him before issuing the pre-possession notice. However, Helpful Finance had no obligation to do this under the credit laws as they were in 2014 and March 2015. We also said to Leighton that if payments were missed because his lawyers’ actions or omissions, he may wish to raise this with his lawyers.

We took into account all the circumstances and told Leighton that in our view, Helpful Finance was not required to credit the repossession costs, or reimburse his motel bills. We also said that the offer to reduce payments to $350 per week appeared to be reasonable.

Leighton did not agree with our CEO’s preliminary view. After a further review of all the evidence, we told Leighton that our views had not changed and we discontinued the investigation.