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A future hearing will decide the penalty Sunshine Loans must pay for charging unlawful fees after its appeal failed.
Payday lender Sunshine Loans has lost its appeal of a court ruling that found it had charged unlawful fees to customers.
Last year, the Federal Court found that Sunshine Loans entered into more than half a million contracts that included an amendment or rescheduling fee not permitted by the National Credit Code.
Sunshine Loans appealed the decision of the case brought by the Australian Securities & Investments Commission (ASIC), but on Monday (24 March), the Federal Court “unanimously dismissed the numerous grounds of appeal” and was critical of the way the appeal was conducted, ASIC said.
Commenting on the latest court verdict, ASIC deputy chair Sarah Court said: “We are pleased the full court has confirmed the decision that Sunshine Loans imposed unlawful fees on its customers.
“Protecting consumers – especially financially vulnerable consumers – from harm is an enduring priority for ASIC.”
What was the court case about?
In the original case, the court found that Sunshine Loans received nearly $300,000 from customers, even though the fees were prohibited under the National Credit Code.
The court said that the lender had failed to comply with credit legislation as a result of this conduct.
After the liability decision was delivered, Justice Derrington was due to hear submissions from the parties on the appropriate penalty to be paid by Sunshine Loans.
However, Sunshine Loans then applied to the judge to disqualify himself from the hearing on the basis of an “apprehension of bias”.
In a separate appeal with a 24 March date of judgment, ASIC successfully appealed that decision.
The matter will now come back before Justice Derrington for a hearing on an appropriate penalty for Sunshine Loans.
In the liability judgment of the initial case, Justice Derrington described the evidence of Sunshine Loans’ witness and director Shane Powe as “not credible” and that he was not a witness “who tried to give his evidence in an honest manner”.
The move comes amid a growing focus on payday lenders by the regulator. Earlier this month, ASIC said it was “concerned” and “disappointed” to see some non-bank lenders pushing vulnerable consumers into small amount credit contracts inappropriately, after releasing a report into how lenders provide small amount credit contracts (SACCs).
The review followed ASIC’s ongoing enforcement of SAAC, including against Sunshine Loans and Ferratum Australia, which were found to have charged prohibited fees.
Last year, ASIC also extended its product intervention orders on short-term and continuing credit contracts until 2032.
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