An illegal payday lending operation has been penalized with fines totaling $7 million, affecting both the companies and their directors. The penalties were imposed due to violations of credit regulations, resulting in over $91 million in fees and charges.
Cigno Australia and BSF Solutions, both based on the Gold Coast, were each fined $3 million. Their directors, Mark Swanepoel and Brenton Harrison, received individual fines of $500,000. The court’s decision to impose these fines was partly influenced by the fact that the directors had sought high-quality legal counsel.
The Australian Securities and Investments Commission (ASIC) had previously indicated that the operation involved payments of $60.5 million to affiliated companies, in addition to the substantial fees charged. However, the court noted that the combined profits of the two companies were only $3.7 million, based on their financial records.
ASIC had successfully pursued legal action against the companies and their directors, resulting in findings in 2024 that confirmed violations of credit laws regarding fees and charges. The penalties were finalized on a recent Friday.
ASIC Chairman Joe Longo emphasized the importance of the ruling, stating that it reflects the organization’s dedication to shielding Australians from exploitative lending practices and holding responsible parties accountable.
Stephanie Tonkin, the chief executive of the Consumer Action Law Centre, expressed some skepticism regarding the adequacy of the $7 million penalty, especially considering the lengthy nature of the case and the extensive harm caused. She acknowledged, however, that it was significant for the directors to be held personally liable.
The companies employed a No Upfront Charge Loan Model, charging nearly $90 million in fees between July 2022 and May 2024. Cigno Australia provided loans ranging from $50 to $1,000, including Centrelink and payday loans, and aggressively marketed their services as “EMERGENCY cash when you need it.”
In documents presented to the court, Swanepoel denied that the company targeted “last resort” customers, claiming it aimed to serve “any consumer, and every consumer.” Justice Ian Jackman remarked that the violations were serious and had inflicted significant loss and damage on consumers, noting the lack of attempts to rectify the issues or display remorse.
Justice Jackman acknowledged that the directors had consulted the national law firm Piper Alderman, which indicated they viewed the relevant laws as complex and intended to comply with them. Although this legal advice did not completely absolve them of liability, it played a role in mitigating the penalty imposed.
The court found that Cigno reported profits of $1.5 million, while BSF Solutions reported $2.2 million, figures that ASIC did not contest. They also highlighted significant payments made to companies linked to the directors, yet Justice Jackman noted that the specifics of these payments were not adequately examined. He suggested that they may relate to dividends or payments for services rendered.
There was no evidence presented that either director personally profited from the operation. Justice Jackman stated that the focus should be on the companies’ net profits as a measure of benefits and that the penalty should be substantial enough to deter future infractions, while also ensuring that it imposed a significant burden.
ASIC contended that without imposing a substantial penalty on the directors, there was a risk they might repeat their previous violations of credit laws. Justice Jackman acknowledged the likelihood of such future violations but expressed confidence that the directors would seek legal advice before engaging in similar activities again.
Attempts to reach the directors for comment were unsuccessful. Previous reports by the ABC in 2024 had revealed connections between major corporations, including a prominent bank, and the lending scheme.
