Sunshine Loans ordered to pay $5.5 million for illegal customer fees

Australia’s Federal Court has ordered small-amount lender Sunshine Loans Pty Ltd to pay $5.5 million in civil penalties for charging customers a fee prohibited under the National Credit Code. The penalty concerns a $35 charge for rescheduling a repayment when the borrower was not in default, imposed on thousands of consumers facing financial pressure. Between July 2016 and November 2020, Sunshine Loans entered into more than 670,000 small amount credit contracts containing the unlawful fee. The company charged it more than 12,000 times and received payment on more than 8,000 occasions, collecting almost $300,000. About $113,000 of that amount was received during the period when civil penalties were available for the contraventions. The lender stopped charging the fee in November 2020, shortly after intervention by the Australian Securities and Investments Commission (ASIC), without admitting liability. Justice Derrington found the contraventions were serious and deliberate, and said substantial deterrence was warranted where conduct exploits financially vulnerable consumers or worsens their hardship. He also said Sunshine Loans’ arguments during the proceedings and appeals included claims “devoid of merit” and that its approach indicated a poor compliance culture. The Court ordered the company to pay ASIC’s legal costs as well as the penalty. ASIC began proceedings in June 2022 after a targeted review of the small amount credit market during the COVID-19 pandemic. The Court found the lender had contravened the Code in April 2024; after appeals over liability and the judge’s recusal decision, the High Court unanimously dismissed Sunshine Loans’ appeal in March 2026, allowing the penalty issue to return to Justice Derrington. The Code permits small-amount credit providers to charge only specified fees, including establishment, monthly and default fees, and government charges. Consumers concerned they were affected can complain to the Australian Financial Complaints Authority, whose service is free.