By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

One of this nation’s largest used car dealers has agreed to pay a $200,000 penalty to settle claims that it over-charged interest on vehicle loans it made to almost 2,000 Bahamians.

The Securities Commission last night published the settlement deal, signed-off on Tuesday this week by its chairman, retired Supreme Court judge K Neville Adderley, and Auto H & L’s president, Hal Shears, which was struck over allegations that the dealership violated the Rate of Interest Act that protects Bahamians from becoming victims of predatory or usury lending.

Setting out the “facts agreed” between the two parties, the settlement recorded that the regulator “conducted routine examinations” of Auto H & L, one of its financial and corporate services provider licensees, in March 2022 and 2023. The Securities Commission “observed a number of breaches” of the relevant Act and associated legislation, including the Rate of Interest Act.

“Further, Auto H & L had reported to the Commission that, some time in 2019, a dump truck crashed into Auto H & L’s offices destroying a number of client records in the process,” the settlement added. “Consequently, Auto H & L was unable to properly account for the number of clients impacted by their error involving the Rate of Interest Act, further aggravating this particular issue.

“Auto H & L, when responding to those findings, agreed that there was a breach of the Rate of Interest Act and indicated to the Commission that this had been done inadvertently.” The Securities Commission, in a May 23, 2023, meeting with the auto dealer directed that the Baker Tilly Gomez accounting firm would conduct an “independent exam” of the company’s books between 2019 and 2023.

The review took place from August 2023 through October 2023 and “confirmed that Auto H & L had charged interest in contravention of the Rate of Interest Act”. Further meetings between the Securities Commission, headed by Christina Rolle, and the dealer took place on January 17, 2024, and May 6, 2024, to discuss the “breaches” and issue a public notice to inform Auto H & L clients of what happened.

This was deemed necessary because of the client files lost in the purported dump truck accident. The financial services regulator, in a May 7, 2024, letter “imposed penalties” for the violations and “directed Auto H & L to repay its clients the interest charged in excess of the lawful rate. The process, which commenced in or around October 2024 under the supervision of Baker Tilly Gomez, remains ongoing”.

The settlement agreement reveals that the Securities Commission and Auto H & L reached a February 21, 2025, agreement that the vehicle dealer would make “a payment of $200,000 in full and final settlement of the penalties imposed” for breaching the Rate of Interest Act and related laws. 

For the purposes of the settlement only, the Securities Commission has agreed to Auto H & L “neither admitting nor denying breaches, allegations and/or liability”. However, the regulator will be free to start administrative or court proceedings should the vehicle dealer breach any aspect of the settlement agreement.

And Auto H & L “shall restore to its clients, both current and former, sums due and owing to them arising from excess interest charged for the periods 2019 to 2023”. It also has to seek the Securities Commission’s “prior approval” should it choose to wind-up or liquidate its business.

The Rate of Interest Act 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 Securities Commission’s release then 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.

The auto dealer, which was 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. “It’s just under 2,000 people and close to $1m in interest adjustments. Not $1m, but close to $1m,” one well-placed source said previously of the sums and clients involved.

Tribune Business understands that Baker Tilly Gomez had to reconstruct some of Auto H&L’s via electronic means after the truck accident. The loan amounts were relatively small, representing credit issued for the purchase of autos and other consumer items to lower and middle income Bahamians.

Borrowers were given until August 30, 2024, to supply proof of their identity, their loan and its terms/rate, and payments made on it to Mr Gomez and Baker Tilly Gomez. In return for being compensated, impacted borrowers have to sign a ‘Deed of Release’ whereby they surrender the right to take future legal action over this matter against Auto H&L.