Archive | Buyback schemes

Commerce Commission warns Keane of possible breaches in Financial Options buyback scheme

Published 27 October 2005

The Commerce Commission has warned Financial Options Group & its director, Anton Keane, their Auckland house buyback schemes may breach the Credit Contracts & Consumer Finance Act.

In a buyback transaction, a homeowner transfers, or agrees to transfer, ownership in a property to another party (known as the buyback operator). The homeowner will still occupy the property and will have the right to repurchase it.

Fair trading director Deborah Battell said the commission had longstanding concerns about buybacks, and the warning to Financial Options was part of its ongoing focus on buyback operators.

The commission warned Mr Keane & his company their schemes risked breaching the act because:

no written disclosure of relevant information had been made to occupiers
there were no certificates of independent legal advice for each step of the transaction – in fact, some contracts signed by occupiers contained waivers of the right to receive independent legal advice, and
Financial Options had mortgaged properties to 3rd parties without first obtaining leave from the High Court, as they are required to when the 2 prior obligations have not been fulfilled.

The commission also warned Financial Options it might have breached the Fair Trading Act by misleading people about their rights to register caveats against the properties, the legal requirements for them to seek independent financial advice and their rights under the Residential Tenancies Act.

Ms Battell said the commission believed the warning would provide the most appropriate outcome this time, but the commission would continue to monitor Mr Keane & his company’s actions.

Breaching the terms of the 3rd bullet point above carries a fine of up to $200,000 &/or jail term of up to one year. Officers of transferee companies can be liable for the same penalties, as parties to the offence of the company.

Mr Keane is a director of Financial Options Ltd, Madlan Investments Ltd, Princeville Properties Ltd & numerous other companies with Properties in their name. He was bankrupt for 4 years from September 1987.

Website: Commerce Commission, buybacks overview


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