The High Court has dismissed special leave applications by Cigno Pty Ltd and BHF Solutions Pty Ltd, seeking to appeal the decision of the Full Federal Court which unanimously found that a ‘financial supply fee’ charged by Cigno was a charge ‘made for providing credit’. 

ASIC succeeded in its appeal before the Full Federal Court in June 2022 (22-158MR), which led to Cigno and BHF Solutions seeking special leave.  

Cigno and BHF Solutions operated a lending model purporting to rely on an exemption in the National Credit Code and claimed they did not require an Australian credit licence.   

The lender, BHF Solutions, provided the credit and charged a fee under the credit contract to consumers. However, Cigno, under a services agreement, separately charged very high fees (including the ‘financial supply fee’) for arranging and managing the credit. These fees, combined with the lender’s fees, exceeded the prescribed maximum charge allowed in order to be exempt from holding a credit licence.  

Background  

Neither Cigno nor BHF Solutions holds, or has ever held, an Australian credit licence.  

In September 2020, ASIC commenced proceedings against Cigno and BHF Solutions seeking declarations and injunctions (20-226MR). In the proceedings, ASIC alleged:  

• BHF Solutions contravened section 29 of the National Credit Act by engaging in credit activities without holding an Australian credit licence by entering into a credit contract with a borrower and carrying on a business of providing credit; and
• Cigno contravened section 29 of the National Credit Act by engaging in credit activities without an Australian credit licence by exercising rights of a credit provider in relation to BHF Solution’s credit contract with the borrower and providing a credit service to the borrower.

In June 2021, the Federal Court dismissed ASIC’s application, finding BHF Solutions and Cigno did not contravene the National Credit Act (21-144MR).  

ASIC appealed to the Full Federal Court in July 2021 (21-179MR) and was successful in July 2022 (22-158MR). The Full Federal Court remitted the matter to the trial judge to determine, among other things, final relief against BHFS and Cigno. That hearing took place on 28 November 2022, with judgment reserved. 

In July 2022, BHF Solutions and Cigno each lodged special leave applications with the High Court to appeal the judgment of the Full Federal Court in June 2022. Those applications were heard on 15 December 2022.