26-269MR Sunshine Loans ordered to pay $5.5 million penalty for charging customers illegal fees

The Federal Court has ordered small amount lender Sunshine Loans Pty Ltd to pay $5.5 million in civil penalties for charging an illegal fee to thousands of consumers that was prohibited under the National Credit Code.

The penalty follows the Court's finding that, between July 2016 and November 2020, Sunshine Loans entered into more than 670,000 small amount credit contracts containing an unlawful $35 amendment fee (24-074MR).

Consumers were charged a fee for agreeing with Sunshine Loans to reschedule the date of a loan repayment, even though the consumer was not in default.

The Court found Sunshine Loans, a significant participant in the small amount credit industry, charged consumers the illegal fee more than 12,000 times and received payment more than 8,000 times, collecting almost $300,000 from consumers.

ASIC Commissioner Alan Kirkland said the outcome reflected ASIC’s enduring enforcement priority to protect financially vulnerable consumers from serious harm.

‘People who rely on small loans are often already under financial pressure, using them to meet essential or unexpected expenses. Unlawful fees only add to that pressure.

'These were people turning to small loans to pay for things like funerals, vehicle registration, school fees, medical procedures, and Christmas presents. Many people had overdrawn bank accounts at the time they took out the loan.

'These consumers should not have been charged fees prohibited by law, and lenders who disregard these protections should expect ASIC to take action.

‘Sunshine Loans fought this case at every turn, including through highly technical legal arguments and appeals. The Court indicated that Sunshine Loans’ many unmeritorious arguments prolonged the litigation and significantly increased the costs associated with it.

‘ASIC remained committed to seeing this matter through and securing an appropriate outcome for consumers,’ Commissioner Kirkland said.

His Honour Justice Derrington found Sunshine Loans’ contraventions were serious and deliberate, and noted that conduct that has the purpose or effect of exploiting financially vulnerable consumers or intensifying their hardship, warrants substantial general deterrence.

On Sunshine Loans’ approach to the proceedings and appeals, his Honour said that ‘many of the arguments advanced … were devoid of merit to the point of being potentially disingenuous’, which in part indicated a poor culture of compliance, and needed to be reflected in the penalty.

The Court also ordered Sunshine Loans to pay ASIC’s costs.

Background

ASIC commenced proceedings against Sunshine Loans in June 2022 following a targeted review of the small amount credit contract (SACC) market during the COVID-19 pandemic (22-132MR).

The penalty follows Justice Derrington's April 2024 judgment finding Sunshine Loans had contravened the National Credit Code by imposing, charging and accepting a prohibited fee (24-074MR).

The penalty hearing was originally set for July 2024 however at that time his Honour recused himself from determining penalty. ASIC appealed his Honour's recusal decision, and Sunshine Loans appealed liability.

Both appeals were determined by the Full Federal Court in ASIC’s favour in March 2025 (25-046MR).

Sunshine Loans then appealed the Full Court’s recusal decision to the High Court, which unanimously dismissed the appeal in March 2026 (26-052MR), following which the matter returned to Justice Derrington for determination of penalty.

At the time of the misconduct, Sunshine Loans was one of the largest credit providers in the SACC market. It remains a significant participant in the consumer credit market, now offering loans up to $3,500.

Under national consumer credit legislation, SACC providers cannot impose fees and charges other than an establishment fee, a monthly fee, a fee payable in the event of default, or a government fee, charge or duty. The amendment fee charged by Sunshine Loans was not one of those permitted fees.

Sunshine Loans ceased charging the amendment or rescheduling fees in November 2020, shortly after ASIC intervention, without admission of liability.

While the unlawful fees were charged for more than seven years, civil penalties were only available for contraventions from 13 March 2019, when the relevant laws became civil penalty provisions. Sunshine Loans received approximately $113,000 for the unlawful fee in the penalty period.

Consumers who have taken out a loan with Sunshine Loans and are concerned they may have been affected can make a complaint to the Australian Financial Complaints Authority on 1800 931 678 or via www.afca.org.au. AFCA is the external dispute resolution scheme for financial complaints in Australia and must deal with complaints independently and fairly. AFCA’s service is free for consumers.

Moneysmart.gov.au has information about payday loans and alternatives and where to find free help with managing debt.

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