Gold Coast payday lender Cigno will fight an ASIC order banning its use of a short-term credit model it calls “predatory lending”
A controversial Gold Coast payday lender will fight an attempt by the corporate regulator to stamp out a business practice described as “predatory”.
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CONTROVERSIAL Gold Coast payday lender Cigno will fight an attempt by the corporate regulator to stamp out a business practice described as “predatory lending”.
The Australian Securities and Investments Commission this morning said Cigno Pty Ltd, which counts former rugby player and Bonogin resident Mark Swanepoel as sole director, has made an application in the Federal Court in NSW seeking orders to reject ASIC’s Product Intervention Order.
The PIO was issued earlier this month banning a model of lending in the short term credit industry ASIC said caused “significant consumer detriment”.
ASIC said Cigno, which has its registered office at 34a Nerang St above Swannie’s bar, used a model that got around obligations under the National Consumer Credit Protection Act 2009 to charge no more than 24 per cent annual interest.
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This was through using an associated company, Gold-Silver Standard Finance Pty Ltd, which has Mark Swanepoel’s father Jan as its sole director, to act as the short-term credit provider and then charging significant upfront fees including for default through associated company under a separate Cigno contract.
A case study from ASIC in its consultation paper describes the situation of a Cigno client who borrowed $120. The total amount to be repaid was $263.60 by four fortnightly payments of about $66.
ASIC said the client could not afford the repayments and “immediately defaulted”.
She was charged dishonour fees and weekly account-keeping fees, resulting in her being liable to repay $1189 — 990 per cent more than she borrowed.
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ASIC said this morning that as well as seeking an order to quash the PIO, Cigno is also asking the court for a declaration that the short-term credit PIO is invalid and costs.
The regulator said it is considering the application, however, in the meantime the PIO remains in force while the case is before the court. The PIO also remains in force for Myfi Australia Pty Ltd, which counts Parkwood resident Jack Martin as sole director, and BHF Solutions Pty Ltd.
Company records list Parkwood resident Brenton Harrison as director of BHF Solutions.
ASIC first sought submissions from the public in July after the Federal Government granted the new powers in April but required ASIC to first consult with affected and interested parties before intervening.
Just two out of 35 submissions opposed the PIO.
ASIC said it had more than 200 reports of misconduct about the short-term lending model used by Cigno with most citing excessive fees and charges.