ASIC has commenced civil penalty proceedings in the Federal Court against Cigno Australia Pty Ltd, its director Mark Swanepoel and BSF Solutions Pty Ltd and its director, Brenton James Harrison for allegedly providing credit without a licence.
The Cigno Australia and BSF ‘No Upfront Charge Loan Model’ provided short-term credit to more than 100,000 consumers between July 2022 and December 2022 and continued to charge substantial fees to those consumers without either entity holding an Australian credit licence.
ASIC is concerned that, under this model, excessive fees were charged to consumers that exceed the amounts allowed to be imposed under the Credit Act. Some affected consumers were charged fees of more than 600% of their total loan amount.
ASIC Deputy Chair Sarah Court said, ‘ASIC believes that this credit model has been designed to avoid consumer protection laws so as to enable these companies to charge significant fees to consumers, many of whom are vulnerable and in financial distress.’
ASIC alleges that BSF provided over $34 million in loans while Cigno Australia and BSF charged over $70 million in fees, without either entity holding an Australian credit licence.
‘ASIC has brought this matter to Court to stop what we consider to be a harmful lending model and to protect consumers from excessive fees and charges,’ Ms Court added.
ASIC further claims that Mr Swanepoel and Mr Harrison were involved in the unlicensed activity and Credit Act breaches.
ASIC is seeking declarations, pecuniary penalties, adverse publicity orders and injunctions permanently restraining Cigno Australia and BSF from engaging in credit activities or accepting fees or charges relating to loan agreements entered into under the ‘No Upfront Charge Loan Model’.
ASIC also seeks injunctions restraining Mr Harrison and Mr Swanepoel from carrying on or being involved in the carrying on of any business engaging in credit activity.
The date for the first case management hearing is yet to be scheduled.
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Background
ASIC has previously taken action against Cigno Pty Ltd (Cigno) and BHF Solutions Pty Ltd (BHF), parties related to the above defendants, who operated a ‘Continuing Credit Model’ between October 2019 and March 2020. In June 2022, the Full Federal Court found that this lending model was unlawful and that these parties had engaged in credit activities without holding an Australian credit licence. In July 2023, on remittal, the Federal Court granted declarations and injunctions against Cigno and BHF (22-158MR).
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Editor's note:
The matter is listed for hearing on 10 November 2023 in relation to the interlocutory relief.
Editor's note 2:
On 10 November 2023, the parties appeared before Justice Jackman in relation to ASIC’s interlocutory application. ASIC’s application was dismissed. The matter is next listed for Case Management Hearing at 9.30am on 11 April 2024 with a trial date set for 22 April 2024.