The Federal Court has found that, between July 2016 and November 2020, small amount lender, Sunshine Loans entered into over 670,000 contracts which included an amendment or rescheduling fee that is not permitted by the National Credit Code.
The Court found Sunshine Loans required the payment of these fees by consumers over 12,000 times and accepted payments on over 8,000 occasions. Sunshine Loans received nearly $300,000 from customers, even though the fees were prohibited under the National Credit Code.
The Court also found that Sunshine Loans failed to comply with credit legislation as a result of this conduct.
ASIC Chair Joe Longo said: ‘Consumers of SACC loans are some of Australia’s most vulnerable. They often take out these small loans for just a few hundred dollars to cover emergency or essential expenses. SACC loans are extremely costly and ASIC is committed to ensuring consumers aren’t charged additional prohibited fees.’
Sunshine Loans ceased charging the amendment or rescheduling fees in November 2020, shortly after ASIC intervention, without admission of liability.
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Background
SunshineLoans Pty Ltd operates online and now offers medium amount credit contracts of between $2,050 to $2,500.
In September 2023, ASIC was successful in proceedings against SACC provider Ferratum Australia, for allegedly charging prohibited fees and overcharging customers (23-248MR).
Consumers who believe they have been charged a prohibited fee by a SACC lender should approach the lender and request a refund. If they are not satisfied with the response, they may lodge a complaint with the Australian Financial Complaints Authority (www.afca.org.au). If you need help, consumers can call the National Debt Helpline for free on 1800 007 007.
Moneysmart has information about loans and alternatives and where to find help with managing debt.
Editor's Note:
On 5 July 2024, the Court made declarations (PDF 149 KB) following its judgment on 12 April 2024 that Sunshine Loans had contravened provisions of the National Credit Code and the National Consumer Credit Protection Act by imposing, charging and accepting prohibited fees from consumers.
On the application of Sunshine Loans, the liability judge recused himself from dealing with the matter further. The matter will be re-allocated to a new judge for a hearing on penalty.
Editor's Note 2:
On 18 July 2024, the liability judge delivered his reasons for decision for recusing himself from dealing with the matter further (Judgment on Recusal).
Editor’s Note 3:
On 19 July 2024, pursuant to the orders regarding recusal made by the Court on 5 July 2024, the proceeding was reallocated to his Honour Justice Logan. A case management hearing has been listed for 25 July 2024.
Editor’s Note 4:
A further case management hearing has been listed for 6 August 2024.
Editor's Note 5:
On 6 August 2024, the matter was adjourned pending the outcome of ASIC’s appeal in respect of the recusal decision by Justice Derrington, and Sunshine Loans’ appeal in respect of liability. A further hearing date has not yet been listed.
Editor's Note 6:
The two appeal hearings have been listed for 12 to 14 November 2024 before the Full Court.
Editor's Note 7:
The two appeals were heard 12 to 14 November 2024 before the Full Court and judgement was reserved.