The financial watchdog has achieved a victory in a lengthy legal battle against Gold Coast lenders who imposed high fees for loans without a credit license.
Between July 2022 and June 2023, over 100,000 consumers borrowed $35 million (US$23 million) from Cigno and BSF Solutions, resulting in fees exceeding $70 million (US$46 million).
Cigno handled the loan marketing while BSF Solutions provided the funds.
The Australian Securities and Investments Commission (ASIC) initially sued Cigno and BHF Solutions in September 2020 for offering short-term credit with excessive fees without a license.
After an unsuccessful case in the Federal Court, ASIC won the appeal in the Full Court, with the High Court denying the lenders the opportunity for further appeal.
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ASIC continued its legal action against Cigno and BSF Solutions in the Federal Court for additional violations between July 2022 and June 2023.
On May 24, Justice Ian Jackman ruled in favor of ASIC, concluding that the two companies had unlawfully issued $34 million (US$23 million) in loans without a license.
One customer, after finding Cigno online, borrowed $250 (US$165) and was charged nearly $500 (US$330) in fees. Subsequently, she took out a second $250 loan and was charged an additional $830 (US$550).
Justice Jackman implicated Cigno Australia director Mark Swanepoel and BSF Solutions director Brenton Harrison in the violations, as they were aware of the companies’ practices.
Both companies and their directors are now prohibited from collecting further fees, charges, or the principal loan amounts from the unlicensed loans.
ASIC plans to pursue monetary penalties and orders for adverse publicity against Cigno and BSF Solutions.
Mr. Swanepoel and Mr. Harrison could face restrictions preventing them from operating businesses involved in credit activities.
âASIC has taken regulatory and enforcement actions over the years to address various business models associated with Cigno Australia, BSF Solutions, Mr. Swanepoel, and Mr. Harrison,â stated ASIC deputy chair Sarah Court.
The case will reconvene in the Federal Court on June 21.
