• Auto dealer ‘in breach’ of predatory lending law
• Hundreds of Bahamian consumers involved

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Several thousand Bahamians may have been over-charged interest on loans issued by one of this nation’s largest used car dealers, it was revealed yesterday.

The Securities Commission, in a notice published on its website and in today’s newspapers, disclosed that an “independent examination” - conducted at its request - uncovered that Auto H & L had “miscalculated” the interest it was demanding borrowers pay and had violated the Rate of Interest Act.

The auto dealer, which is based on Tonique Williams Highway, had “asserted that these miscalculations were inadvertent” and has pledged to “fully reimburse” all impacted Bahamians for the period between 2019 and 2023. However, the compensation effort has been complicated because some Auto H & L client files were “irreparably damaged” by what was described as an “on-site accident”.

Christina Rolle, the Securities Commission’s executive director, declined to comment beyond the details contained in the capital markets regulator’s statement. However, well-placed sources told Tribune Business on condition of anonymity that the total overcharged sum could amount to $500,000 or possibly be even higher given the uncertainty created by the destruction of borrower files.

Given that the loan amounts were relatively small, representing credit issued for the purchase of autos and other consumer items, it was suggested that several thousand borrowers may be victims. The true number, though, is presently unknown which is why the Securities Commission is asking Auto H & L loan clients to e-mail details and proof to the accounting firm that conducted the examination.

When Tribune Business attempted to obtain comment from Auto H & L, whose principal was identified as Hal Shearer, repeated calls to its office telephones were eventually answered by the cleaning lady who said all staff had gone home at 4pm. This newspaper, which eventually managed to pass a message to the auto dealer’s principal via his attorney, was subsequently told: “He has no comment.”

The Securities Commission, in its statement, confirmed that Auto H & L was one of its licensees under the Financial and Corporate Service Providers Act 2020. “Through an on-site examination conducted in March 2022, and followed-up in March 2023, the Commission became aware that Auto H & L miscalculated the interest on loans for its customers as required under the Rate of Interest Act,” the regulator said.

“Subsequent to its follow-up examination in March 2023, the Commission engaged the audit firm, Baker Tilly Gomez, to conduct an independent examination focused on interest calculations during the period 2019 to 2023. The examination confirmed that Auto H & L was in breach of the Rate of Interest Act and a final report was provided to Auto H & L in January 2024.”

The Securities Commission provided no specifics, but the Rate of Interest Act is designed to protect Bahamians from becoming victim of predatory or usury lending. It regulates the interest that can be charged on loans, stipulating that this must not exceed 20 percent per annum on credit of more than $100 or 30 percent on sums below $100.

While the regulator’s release did not specifically say so, the fact Auto H & L was “in breach” seems to imply it was charging interest in excess of those percentages. “They over-billed,” one source simply said.

“In its defence, Auto H & L has asserted that these miscalculations were inadvertent and, as such, has agreed to fully reimburse all clients who were impacted,” the Securities Commission said. “Persons affected by Auto H & L’s miscalculations may include both present and past clients of Auto H & L during the years 2019 to 2023.

“However, due to an on-site accident, certain client records of Auto H & L were irreparably damaged. As such, the Commission requires Auto H & L to reach out to the public in order to ascertain, as best as possible, the full population that may have been impacted by the interest miscalculations.”

One source, speaking on condition of anonymity, said of the “on-site accident”: “There was a truck that ran into a building where the files were kept.” They added that Auto H & L will also have to likely reach a settlement with the Securities Commission over the affair which could result in the company having to pay fines/penalties.

The regulator yesterday called on all borrowers who believe they have been over-charged, and paid excessive interest on their loans, to contact Baker Tilly Gomez and its top accountant, Craig A. (Tony) Gomez electronically with proof of their identity, the loan and its terms/rate, and payments made on it.

Mr Gomez declined to comment when contacted by Tribune Business, instead referring this newspaper back to the Securities Commission. All potentially impacted Auto H & L borrowers have until Friday, August 30, 2024, to submit the necessary documents to Baker Tilly Gomez.

“Note that if you are unable to locate any of the above required documents, Auto H & L may not be able to disburse any owed amounts to you,” the Securities Commission warned. Several sources yesterday suggested the dealer appeared to be running down its inventory in preparation to exit the auto business and focus solely on loans, although this could not be confirmed before press time.