ASIC has appealed a Federal Court decision ordering Cigno Australia and its director Mark Swanepoel, and BSF Solutions and its director Brenton Harrison, to pay a combined $7 million in civil penalties.
The penalties followed the Federal Court's finding that the companies engaged in credit activity without a license and charged consumers fees that were prohibited under credit laws. The Court ruled Mr Swanepoel and Mr Harrison were involved in those breaches (26-078MR).
ASIC is appealing the decision because it is concerned the penalties imposed provide insufficient deterrence.
The lending model operated by the companies and their directors charged consumers more than $90 million in unlawful fees, and ASIC believes the Respondents' decision to operate the lending model without a license denied consumers important rights and protections under the credit legislation. The Respondents have not engaged in any remediation program to address the consumer harm caused by charging the unlawful fees.
ASIC's appeal also seeks clarification from the Full Federal Court on two legal issues relevant to penalty decisions:
- When a contravener may rely, in mitigation of the penalty, upon the receipt of legal advice without tendering that advice to the Court, and
- Whether the 'benefit obtained' from the misconduct for the purposes of determining an appropriate penalty should be assessed by reference to profit (as held by the primary judge) or by reference to gross revenue (as argued by ASIC).
The appeal will be heard by the Full Federal Court on a date to be determined.
