ASIC has launched a civil penalty action in the Federal Court against Cigno Australia and its director, Mark Swanepoel, and BSF Solutions and its director, Brenton James Harrison, for allegedly providing credit without a licence.
In a media release, the corporate watchdog said Cigno Australia and BSF provided short-term credit, under their no-upfront-charge loan model, to 100,000-plus consumers from July 2022 to December 2022, and continued to charge those consumers substantial fees despite both entities not holding an Australian credit licence.
ASIC said that consumers were charged exorbitantly and beyond the amounts allowed under the Credit Act under the lending model. Some affected consumers were hit with charges 600% bigger than their total loan amount.
“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 Deputy Chair Sarah Court (pictured above) said.
BSF allegedly provided more than $34 million in loans while Cigno Australia and BSF charged more than $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,” Court said.
ASIC also charged Swanepoel and Harrison for their involvement in the unlicensed activity and Credit Act breaches.
The regulator said it 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.”
Against Harrison and Swanepoel, injunctions were being sought restraining them from carrying on or being involved in the carrying on of any business engaging in credit activity.
The first case management hearing has not yet been scheduled.
