ROELAND van den BERGH – Dominion Post – 26 May 2007

The owners of Auckland car finance company Dolbak Finance have been fined $100,000 for failing to disclose fees and charges in loan contracts, and ordered to pay
$46,600 in compensation to customers. 

David Dolbel and Anthony Baker each pleaded guilty In Auckland District Court to 22 charges of breaching the Credit Contracts and Consumer Finance Act. The prosecution was brought by the Commerce Commission after the pair ignored two warnings to comply with the act.

Dolbel was fined $49,500 and Baker $50,500. The court also ordered them to pay damages to 100 borrowers of about 5 per cent of the total loan, ranging from $200 to $1000.

Those customers had bought second-hand cars from Fleetz Wholesale Cars, owned by Baker, in Penrose between April 2005 and June 2006. Both men admitted breaching the act by not disclosing fees, how interest was calculated or how to pay the loan off early.

Borrowers were not told they would be charged $5 for every warning letter sent if a payment was missed, $20 for sending a repossession notice, or $75 for preparing a repossession authority. “Lenders must clearly disclose all the fees and charges that apply, so that borrowers aren’t hit with unexpected costs,” the commission’s director of fair trading, Deborah Battell, said.

The pair also did not send guarantors of the loans a copy of the contract, and wrongly showed interest in advance on borrowers’ accounts, instead of showing interest only when it had been accrued.

Dolbel and Baker also admitted breaching the Fair Trading Act by threatening to repossess nine vehicles when loan payments were not made. Dolbak Finance had no right to repossess the vehicles because the loan contracts did not comply with the law.

Meanwhile, Standard and Poor’s Rating Services said New Zealand finance companies were working to improve their financial strength profile ahead of expected regulatory changes this year. Standard and Poor’s director Gavin Gunning said initiatives included diversifying funding sources, streamlining organisational structures, close product performance assessments, and considering mergers and strategic alliances.