Background
SunshineLoans included a $35 “Amendment Fee”, previously described as a rescheduled-payment fee, in its small amount credit contracts. The fee applied when, among other circumstances, a borrower requested and was granted a deferral of a scheduled repayment. On 12 April 2024, the Federal Court found contraventions of ss 24(1A)(a) and (b) of the National Credit Code and s 47(1)(d) of the National Consumer Credit Protection Act 2009 (Cth). Declarations followed on 5 July 2024, but penalty was deferred.
The Full Court dismissed SunshineLoans’ liability appeal on 24 March 2025 and reframed the declarations. It identified separate contraventions for entering contracts containing the fee, charging the fee and accepting payment, divided between the periods before and after 13 March 2019. A separate attempt to have the penalty hearing reallocated to another judge ultimately failed, with the High Court upholding that result on 18 March 2026. Justice Derrington consequently heard the penalty application on 21 September 2026.
Only contraventions from 13 March 2019 to 2 November 2020 attracted civil penalties because s 24(1A) became a civil penalty provision on that date. The penalty-period conduct comprised 245,704 contract-term contraventions, 3,772 fee-charging contraventions and 3,247 fee-receipt contraventions. ASIC sought $10.5 million; SunshineLoans proposed $1 million.
The Court’s Holding
The Court imposed penalties totalling $5.5 million: $3.5 million for entering contracts containing the prohibited term, $850,000 for charging the fee and $1.15 million for accepting payment. Each category was treated as a course of conduct, with substantial factual overlap because all three arose from the same contractual term. The Court did not impose a separate penalty for the s 47(1)(d) declarations.
Justice Derrington held that the conduct was serious and deliberate, affected financially vulnerable consumers over a lengthy period and required substantial general and specific deterrence. SunshineLoans was a significant consumer-credit participant, its senior management remained unchanged and its compliance measures carried limited mitigating weight given the liability findings and its litigation conduct. The Court rejected Mr Powe’s revised account minimising his role in adopting the fee, preferring his earlier account that he, Mr Simmons and Dr O’Shea collectively decided to include it. There was insufficient evidence that management knew the fee was unlawful, but the inclusion was deliberate rather than inadvertent, and specific advice about its legality should have been sought.
Some allowance was made for the fee’s inclusion in solicitor-prepared templates, although there was no evidence of positive advice that it was legal. The comprehensive remediation program was a significant mitigating factor despite delay: at least $420,000 had been paid by 20 August 2026, with total payments anticipated to exceed $700,000, compared with $293,160 received from the fee during the relevant period. The Court also found that the financial evidence did not establish that the penalty would necessarily prevent SunshineLoans from trading. Capacity to pay did not outweigh general deterrence.
Key Takeaways
- The $5.5 million penalty was allocated across three overlapping courses of conduct, not calculated mechanically from the theoretical maximum.
- Reliance on solicitor-prepared contracts received some weight, but did not establish positive advice that the fee was lawful or excuse the deliberate adoption of the term.
- Late but comprehensive remediation materially mitigated penalty; limited insight, unchanged management and the conduct of the liability defence sustained the need for specific deterrence.
Why It Matters
The judgment illustrates how consumer-credit penalties turn on an integrated assessment of deterrence, consumer vulnerability, deliberateness, compliance, cooperation, remediation and financial capacity. A vast theoretical maximum remains relevant but may offer limited practical guidance where numerous contraventions arise from overlapping courses of conduct.
SunshineLoans must pay each penalty in two equal instalments, due by 5 February 2027 and 7 May 2027. It must also pay ASIC’s costs of the liability and penalty proceedings on the standard basis, as assessed or agreed.