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Following a series of appeals, ASIC has been successful in its action against two companies for operating “a harmful lending model”.
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Business consulting firm engaged in unlicensed conduct: ASIC
14 July 2023
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Business consulting and bookkeeping services firm BHF Solutions Pty Ltd has been found to have engaged in credit activities without holding an Australian credit licence, according to ASIC.
The federal court found both Cigno Pty Ltd and the business consultancy and bookkeeping services firm had engaged in credit activities without holding an Australian credit licence and provided ASIC with permanent injunctions against both companies to protect consumers.
ASIC commenced proceedings in 2020 when it said BHF Solutions was writing more than 1,000 loans each day that it would charge significant fees on.
ASIC said Cigno would then, as part of the services agreement, charge a high financial supply fee for arranging and managing the credit.
As part of the case, ASIC provided an example of the substantial fees consumers were faced with.
“A borrower with a $200 loan repaid in two months ended up paying $177.75 in fees to BHF Solutions and Cigno,” said ASIC.
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“The same borrower went on to borrow a further $600, ultimately paying another $703 in fees.”
Justice Halley found the objective purpose of the lending model established by BHF Solutions and Cigno was to avoid the provisions of the National Credit Act and National Credit Code, which provides protections for consumers from exaggerated fees and charges.
ASIC deputy chair Karen Chester welcomed the decision and said it was a pleasing outcome after an extended case.
“ASIC took this case to stop a harmful lending model, one which circumvented Australian credit laws and regulations and charged excessive fees and charges to many vulnerable consumers,” said Ms Chester.
“ASIC expects that Cigno and BHF Solutions will notify any affected consumers to ensure they are not paying any fees or charges covered by the injunctions.”
“ASIC also expects that both entities have processes in place to ensure ongoing compliance with the injunctions.”
ASIC confirmed that neither Cigno nor BHF Solutions had ever held an Australian credit licence.
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