SYDNEY – The Federal Court has imposed $7 million in penalties on two payday lending firms and their directors following a systemic breach of credit laws that generated more than $91 million in fees and charges.
The ruling targets Gold Coast-based Cigno Australia and BSF Solutions, as well as their respective directors, Mark Swanepoel and Brenton Harrison. The penalties come as part of a broader regulatory effort by the Australian Securities and Investments Commission (ASIC) to curb predatory lending practices within the high-interest short-term credit market, particularly where lenders have sought to operate at the edges of the National Consumer Credit Protection Act.
This case highlights the critical intersection of corporate governance and regulatory compliance, specifically regarding the “No Upfront Charge Loan Model” employed by the firms. Under this structure, core credit contracts may appear low-cost, while substantial fees are charged by associated entities for management or related services. The court’s decision to mitigate some penalties based on the pursuit of professional legal advice provides a significant precedent for how reliance on counsel is weighed against consumer harm in the Australian financial sector.
The financial penalties are distributed as follows:
| Entity / Individual | Penalty Amount |
|---|---|
| Cigno Australia | $3,000,000 |
| BSF Solutions | $3,000,000 |
| Mark Swanepoel (Director) | $500,000 |
| Brenton Harrison (Director) | $500,000 |
Regulatory Breach and Financial Impact
Between July 2022 and May 2024, the operation generated nearly $90 million in fees. Cigno Australia marketed loans ranging from $50 to $1,000, prominently targeting consumers seeking “EMERGENCY cash” and positioning itself as a fast, flexible alternative to mainstream bank products. While Mark Swanepoel argued in court documents that the company targeted “any consumer, and every consumer” rather than specifically “last resort” borrowers, the court found the contraventions were serious and affected financially vulnerable customers with limited access to traditional credit.
ASIC’s investigation highlighted $60.5 million in payments made to related companies, including $51.9 million to entities associated with Mr. Swanepoel and $8.5 million to those linked to Mr. Harrison. However, the court determined, based on company accounts, that joint profits for the two lending entities were only $3.7 million-$1.5 million for Cigno and $2.2 million for BSF-underscoring the complex web of intra-group payments and the challenge for regulators in tracing where value ultimately sits.
Justice Ian Jackman noted that the breaches caused substantial loss and harm to consumers and that the respondents made no attempts to remedy the situation, compensate affected borrowers, or express remorse. The judgment emphasised that the firms had continued operating the model despite earlier regulatory attention and warnings about similar arrangements in the fringe lending sector, reinforcing the need for penalties that carry a real deterrent effect.
Mark Swanepoel has been ordered to pay $500,000. (Getty Images: Stefan Postles)
Corporate Governance and Legal Mitigation
A central point of the judgment was the role of professional legal advice. The directors had sought counsel from the national law firm Piper Alderman following previous regulatory disputes involving other lending schemes and changes to credit law designed to capture high-cost short-term products.
“I infer that that request for advice was made because the respondents genuinely regarded the relevant law as complex and uncertain, and because they genuinely intended to act lawfully,” Justice Jackman stated.
While this advice did not exonerate the directors from liability or diminish the seriousness of the misconduct, the court ruled it had significance in reducing the total penalty. The judge found there was no evidence that either director obtained a direct personal financial benefit from the specific contraventions, suggesting that payments to related companies may have been dividends, inter‑company transfers, or payments for services rather than straightforward cash extractions by the individuals.
This focus on “disgorgement of benefits”-stripping a business of profits derived from illegal activity-is a standard mechanism under the credit law framework to ensure that regulatory breaches are not viewed as a mere cost of doing business. In practical terms, it means penalties must not only reflect the scale of harm but also neutralise any commercial advantage gained by operating outside the rules, a key consideration for boards overseeing aggressive growth strategies in regulated sectors.
Cigno Australia’s website advertised “EMERGENCY cash when you need it”. (Supplied)
Market Implications and Policy Signals
ASIC chairman Joe Longo stated the outcome demonstrates the regulator’s commitment to “protecting Australians from predatory lending practices and holding individuals and companies accountable.” For ASIC, the case is likely to be cited as evidence that directors in high-risk consumer finance businesses cannot simply rely on complex structures or third‑party service entities to shield them from personal consequences.
However, the scale of the penalty has drawn criticism from consumer advocates. Stephanie Tonkin, chief executive of the Consumer Action Law Centre, questioned whether $7 million was sufficient given the “widespread harm” and the length of the legal saga, although she noted the significance of holding directors personally liable. Advocacy groups argue that relatively modest penalties, when set against tens of millions of dollars in fees, risk dulling the deterrent effect unless coupled with stronger enforcement and clearer policy settings around high‑cost credit.
The case also touches on the broader financial ecosystem, as previous investigations have indicated the involvement of larger financial institutions, including a Big Four bank, with the scheme. For major lenders and payment providers, the ruling will be closely read as a reminder of the reputational and regulatory exposure that can flow from supporting fringe operators, even indirectly, through funding lines or transaction services.
The court concluded that while there is a “realistic possibility” the directors could engage in future contraventions, they are unlikely to do so without seeking further legal counsel. That assessment places a renewed onus on boards and compliance teams across the sector: seeking advice is relevant, but it will not excuse conduct that ultimately leaves consumers worse off.
Attempts to obtain comment from Mark Swanepoel and Brenton Harrison were unsuccessful. The $7 million in fines remain a mandatory court order, and the judgment adds to growing pressure on policymakers to decide whether Australia’s current credit laws and penalty settings are sufficient to police the outer edges of the payday lending market.
