ASIC slaps online lender with lawsuit

ASIC has alleged that the online personal lender charged the fees to customers when providing small amount credit contracts, in new civil penalty proceedings filed in the Federal Court.

Sunshine Loans supposedly charged the fees when customers sought to reschedule or amend the payments of their contracts more than 9,000 times, in circumstances ASIC alleged where the fees were prohibited under the National Credit Code.

ASIC has alleged that between July 2016 and November 2020, Sunshine Loans entered into more than 670,000 contracts that included an amendment or rescheduling fee that is not permitted by the code.

ASIC deputy chair Sarah Court commented that in 2020, ASIC undertook a targeted review of small amount credit contract market participants, looking into fees charged.

“This project was especially important during the COVID-19 pandemic, noting the high cost of these loans and the financial vulnerability of consumers that need them,” Ms Court said.

“Small amount loans are often taken out by financially vulnerable consumers to cover everyday expenses. These fees then increase consumers’ debt and can contribute to financial hardship.

“This case is one of a number of matters recently by ASIC to ensure that consumer protections in the Credit Code are enforced, and ASIC will be seeking court orders and penalties if it is successful in the proceedings.”

Sunshine Loans stopped charging the amendment or rescheduling fees in November 2020, shortly after ASIC intervention, without admission of liability.

The matter has yet to be listed by the court.

In November last year, ASIC commenced proceedings against small amount credit contract provider Ferratum Australia, for allegedly charging prohibited fees and overcharging customers.

ASIC has prompted consumers who believe they have been charged a prohibited fee by a SACC lender to approach their provider and request a refund.

Recently, ASIC also launched a lawsuit against ANZ, over allegedly misleading customers around their available funds and balances in their credit card accounts.

The regulator’s former deputy chair Daniel Crennan also revealed that ASIC had chosen not to appeal the infamous “wagyu and shiraz” ruling due to the pandemic, after Federal Court Justice Nye Perram dismissed its responsible lending case against Westpac.

In April however, the Federal Court ordered Westpac to pay $40 million for charging dead customers financial advice fees, contributing to a total of $113 million in penalties across six lawsuits from ASIC.