The Federal Court has found Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) engaged in credit activity without an Australian Credit licence and charged consumers prohibited fees.
The Court also found that Cigno Australia director Mark Swanepoel and BSF Solutions director Brenton Harrison were involved in the unlicensed activity and other Credit Act breaches.
ASIC Deputy Chair Sarah Court said, ‘ASIC has taken regulatory and enforcement action over many years to respond to various business models used by entities connected to Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison.'
'We took this action because we were concerned that the Cigno Australia and BSF Solutions ‘No Upfront Charge Loan Model’ provided short-term loans totalling over $34 million and charged over $70 million in fees to more than 100,000 consumers between July 2022 and December 2022.’
The Court made orders restraining Cigno Australia and BSF Solutions from recovering any further fees, charges or other amounts (including late payment fees and amounts of principal).
The matter is listed for a further case management hearing on 21 June 2024 for the consideration of further relief against the Respondents including adverse publicity orders and civil penalties.
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Background
On 3 October 2023, ASIC began civil penalty proceedings in the Federal Court against Cigno Australia, its director Mark Swanepoel and BSF Solutions and its director, Brenton James Harrison for allegedly providing credit without a licence (23-266MR).
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).
ASIC’s Moneysmart website features information to support Australian consumers when making financial decisions. Find out more about payday loans and alternatives and where to find free help with managing debt.
Editor’s note 1:
On 11 June 2024, Cigno Australia and BSF Solutions filed an application for leave against the Federal Court’s decision of 24 May 2024. The respondents’ application for leave to appeal will likely be heard and determined by the Full Court in the November 2024 sitting period, immediately prior to or concurrently with the proposed appeal.
Editor’s note 2:
On 21 June 2024, the Federal Court of Australia listed the penalty hearing for 24 February 2025. The Court also made adverse publicity orders requiring Cigno Australia and BSF Solutions to publish a notice on their respective websites and send direct communications notifying each of its consumers of the Court’s orders.
Editor's note 3:
The Case Management Hearing on 30 August 2024 and the penalty hearing listed for 24-26 February 2025 are vacated.
Editor's note 4:
The appeal is listed on the 14 November 2024 for an estimated 2-day hearing.
Editor's note 5:
The appeal hearing concluded on 14 November 2024. Judgment has been reserved.