Sunshine Loans faces $5.5 million penalty in Australia illegal fee case

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Sunshine Loans penalty in Australia

Highlights

Federal Court ordered Sunshine Loans Pty Ltd to pay $5.5 million in civil penalties for charging an illegal $35 fee under the National Credit Code.
Sunshine Loans included the unlawful fee in over 670,000 contracts, charging consumers more than 12,000 times and collecting almost $300,000 in payments.
Justice Derrington labeled the contraventions serious and deliberate, citing a poor compliance culture and imposing a penalty aimed at deterrence.

Court ruling and unlawful fee findings

As reported by ASIC, the Federal Court has ordered Sunshine Loans Pty Ltd to pay $5.5 million in civil penalties for charging an illegal fee to thousands of consumers under the National Credit Code.

The court found Sunshine Loans included an unlawful $35 amendment fee in more than 670,000 small amount credit contracts. Consumers were charged the fee when they agreed with the lender to reschedule a loan repayment date even though they were not in default.

The judgment says the lender charged the illegal fee more than 12,000 times and received payment more than 8,000 times, collecting almost $300,000 from consumers. The court also ordered Sunshine Loans to pay ASIC's costs.

Consumer protection and compliance impact

ASIC Commissioner Alan Kirkland said the outcome reflects the regulator's enforcement focus on protecting financially vulnerable consumers from serious harm. He said borrowers using small loans are often already under financial pressure and should not face fees that are prohibited by law.

Kirkland said many affected customers took out loans for essential or unexpected expenses including funerals, vehicle registration, school fees, medical procedures and Christmas presents, with many already holding overdrawn bank accounts at the time.

Justice Derrington found the contraventions were serious and deliberate, and said conduct that exploits financially vulnerable consumers or worsens their hardship warrants substantial general deterrence. He also said many arguments advanced by Sunshine Loans in the proceedings and appeals lacked merit, a factor the court said pointed in part to a poor compliance culture and should be reflected in the penalty.

In our earlier article, we covered an Ontario court case over unauthorized shoreline work along the Sturgeon River that led to convictions and combined fines and court-ordered payments for damaging endangered Lake Sturgeon habitat and violating conservation reserve rules. The case underscored the regulatory and operational risks for companies and contractors when permit requirements are ignored, with penalties also directed toward habitat recovery efforts.

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