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Lender fined $5.5 million after charging illegal fee 12,000 times
A small-loan lender has been hit with a multimillion-dollar penalty for illegally charging financially vulnerable Australians, with a judge delivering a scathing assessment of its defence.
- The Federal Court has ordered Sunshine Loans to pay $5.5 million after finding it charged an illegal $35 fee more than 12,000 times.
- Justice Derrington said sole director Shane Powe gave evidence in “an attempt to cast the blame” on his lawyers.
- A refund program expected to top $700,000 likely kept the penalty from being “substantially higher,” the judge wrote.
Small-loan lender Sunshine Loans was ordered Friday to pay $5.5 million for charging an illegal $35 fee, with the Federal Court finding its contraventions “were serious and deliberate.”
The Australian Securities and Investments Commission (ASIC) said in a statement that Sunshine Loans charged customers the fee more than 12,000 times between July 2016 and November 2020 for rescheduling a repayment while not in default, collecting almost $300,000.
The penalty is about two and a half times the $2.17 million profit the lender made in the 2025 financial year, with Justice Derrington warning that exploiting vulnerable borrowers “should not be countenanced by an insufficient penalty, lest the other market participants consider it to be an acceptable cost of doing business.”
A forensic accountant’s report filed by the lender said a penalty around this size would leave it unable to keep trading, but the judge said the evidence did not establish that.
The regulator sued the lender in June 2022 and later sought $10.5 million, while Sunshine Loans proposed $1 million, with penalties available only for conduct from March 13, 2019, a period covering 3,772 charges and $113,645 received.
The judge called $1 million “plainly not sufficient” and said $10.5 million “would be excessive.”
“Had it not been implemented, it is likely that the appropriate penalty would have been substantially higher,” he wrote of a refund program the lender expects to cost more than $700,000.
Sunshine Loans must pay half by February 5, 2027 and the rest by May 7, 2027, and must also pay ASIC’s costs.
The court found the lender liable in April 2024, the Full Federal Court ruled in ASIC’s favour on two appeals in March 2025, and the High Court dismissed the lender’s further appeal in March.
The lender argued its solicitors prepared the contracts, making its contraventions neither deliberate nor intentional.
Justice Derrington allowed for that, but said: “there is no evidence that SunshineLoans ever received positive advice to the effect that the Amendment Fee was legal.”
He found insufficient evidence that sole director Shane Powe knew the fee was unlawful, but wrote that “he ought to have been aware.”
Powe appeared to make “the calculated decision to give evidence in an attempt to cast the blame for the Amendment Fee upon his lawyers,” the judge wrote, noting it is “difficult not to regard the claimed contrition as being a mere tactical step, made in the hope of lighter penalty.”
ASIC’s counsel called the lender’s defence “scorched-earth litigation,” which the judge said “was not an inapt description,” with many arguments “devoid of merit to the point of being potentially disingenuous.”
The fee sat in contracts affecting about 670,000 people, though “a relatively small proportion of people were ever required to pay the unlawful fee,” the judge wrote.
“These were people turning to small loans to pay for things like funerals, vehicle registration, school fees, medical procedures, and Christmas presents,” ASIC Commissioner Alan Kirkland said.
Sunshine Loans argued the fee brought in neither a substantial profit nor a substantial share of its income, but the judge said its impact “is likely to have been magnified relative to the amount actually charged and received.”
The law limits small amount lenders to establishment, monthly and default fees and government charges, and the amendment fee was none of those, ASIC said.
Sunshine Loans stopped charging the fee in November 2020, shortly after ASIC intervened and without admitting liability, and now offers loans of up to $3,500.