Loan scheme founders operated without a licence, court finds

Two companies backed by a former super rugby player and his business partner face fines after a court found they engaged in credit activities without a licence.

ASIC deputy chair Sarah Court. ASIC pursued the case against the loan businesses. Picture: Aaron Francis

Two companies behind a money trap that took $70m in loan fees from 100,000 consumers have been found by a court to have engaged in credit activities without a licence.

The Australian Securities and Investments Commission won their case against loan sharks Cigno and BSF and their directors, former super rugby player Mark Swanepoel and Brenton Harrison.

Swanepoel and Harrison were found to be running schemes without credit licences where customers loaned in total $30m ended up paying huge default fees and interest charges.

Between July 2022 and October 2023 Mr Swanepoel’s Cigno based on the Gold Coast marketed small loans ranging $50 to $1000 to consumers, processed loan applications and managed repayments and Mr Harrison’s BSF advanced those loans to consumers.

Both men were identified in evidence as being the main decision makers at their respective companies, and Federal Court judge Ian Jackman said he was satisfied they both had actual knowledge of the scheme and were therefore liable for that conduct.

That included knowing Cigno made charges to provide credit, engagement by BSF in credit activities and the demanding, receiving and accepting of fees, charges or other amounts from consumers.

Mark Swanepoel

They also knew BSF did not hold a licence authorising it to engage in those credit activities.

Neither of the men gave evidence during hearings earlier this year.

The loans were branded as “emergency cash when you need it” and consumers were told they could get it within hours of applying on a 24/7 platform.

Justice Jackman highlighted an example of one woman’s plight in his reasons, published on Friday.

Identified only as Ms McDougall, Justice Jackman said she took out two loans with the businesses in 2022 after searching “quick cash loans” on Google.

She discovered Cigno’s website and applied for a $250 loan, received approval one hour later and had the money in her bank account on the same day.

She had to promise to pay a late fee of $20 each time a payment amount was not paid before a due date plus a $34.59 account keeping fee payable weekly and in advance along with potential default fees of $67 and change of payment schedule fees of $15.

In total, she paid $492.13 for a $250 loan.

On the second occasion, Ms McDougall applied for another $250 loan with Cigno in November 2022. Because her account details had been saved, she was notified within an hour that Cigno secured a loan for her from BSF.

“On 20 February 2023, Ms McDougall sent an email to Cigno asking if Cigno could organise a payment plan as she was experiencing financial difficulties,” the judgement read.

Nearly a year later in October 2023, she had paid Cigno $785 for a loan worth $250.

The Federal Court in June 2022 had already ruled an earlier version of their loan model was unlawful.

Under the Credit Act, a person is prohibited from engaging in credit activities if they do not hold a licence.

A hearing about fines will be held at a later date.