ASIC Sues Payday Lender Sunshine Loans for Charging "Prohibited" Fees

ASIC (Australian Securities and Investments Commission) has commenced Federal Court proceedings against payday lender Sunshine Loans for collecting over AUD 320,000 in fees that it was "prohibited" from charging.

ASIC alleges that the company charged the fees to consumers over 9,000 times when they sought to reschedule or amend their payments under contract, in circumstances where such fees were prohibited under the NCC (National Credit Code).

According to ASIC, Sunshine Loans entered into over 670,000 contracts between July 2016 and November 2020 that included an amendment or rescheduling fee that is not permitted by the NCC. Sunshine Loans ceased charging the amendment or rescheduling fees in November 2020, shortly after ASIC intervention, without admission of liability.

In 2020, ASIC undertook a targeted review of payday lenders to ensure consumers with small loans were only being charged fees permitted under the NCC. "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," said ASIC deputy chair Sarah Court.

"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 taken recently by ASIC to ensure that consumer protections in the Credit Code are enforced."

ASIC will be seeking Court orders and penalties if it is successful in the proceedings against Sunshine Loans, Ms Court further stated.

In November 2021, ASIC also commenced proceedings against Ferratum Australia, another payday lender alleged to have imposed prohibited fees and overcharged customers.