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Selected cases

Federal Court of Australia · [2026] FCA 450

ASIC v BSF Solutions and Cigno Australia

A Federal Court penalty case about the Cigno and BSF No Upfront Charge Loan Model, unlicensed credit activity and prohibited fees.

Federal Court of Australia17 Apr 2026

Plain-English explainers, not legal advice. Check the linked official source before you rely on a specific section, and get advice for your situation.

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Quick read

  • Credit products cannot be structured around licensing and fee caps without serious risk.
  • A Federal Court penalty case about the Cigno and BSF No Upfront Charge Loan Model, unlicensed credit activity and prohibited fees.

Use this to check

  • Splitting a credit model across entities does not remove credit-law risk by itself.
  • Legal advice can reduce penalty exposure, but it will not validate a model the Court finds unlawful.
  • Directors should understand the licensing, fee cap and product intervention risks before launch.

Decision snapshot

  1. 1

    What happened

    • BSF Solutions and Cigno Australia operated the No Upfront Charge Loan Model from July 2022.
    • Cigno marketed small loans, processed applications, managed repayments and communicated with consumers, while BSF advanced the loans.
    • Consumers entered both a loan agreement with BSF and a services agreement with Cigno.
    • Earlier liability findings held that BSF and Cigno engaged in credit activity without an Australian credit licence and charged prohibited fees.
  2. 2

    What the court had to decide

    • The Federal Court had to determine penalties for Credit Act contraventions after earlier liability findings, including the relevance of legal advice, the benefit obtained from the model, deterrence, consumer harm and whether broader injunctions against the directors should be made.
  3. 3

    What the court decided

    • The Federal Court ordered BSF Solutions and Cigno Australia to pay $3 million each, and ordered directors Brenton Harrison and Mark Swanepoel to pay $500,000 each.
    • ASIC later appealed, arguing the $7 million total penalty was too low and seeking clarification on penalty issues.

Practical impact

Practical read

  • Credit products cannot be structured around licensing and fee caps without serious risk.
  • Legal advice can matter on penalty, but it is not a free pass if the model still denies customers the protections of the credit law.

Useful next steps

  • Splitting a credit model across entities does not remove credit-law risk by itself.
  • Legal advice can reduce penalty exposure, but it will not validate a model the Court finds unlawful.
  • Directors should understand the licensing, fee cap and product intervention risks before launch.
  • If a model relies on customers signing a separate services agreement, check the commercial substance of the whole arrangement.
  • Map each entity's role in any lending or payment product before launch.

Practical read

This case is about the line between clever product structuring and regulated credit. The model separated the loan provider from the service provider, with one entity advancing loans and another charging account keeping, default and payment-change fees. The legal fight was whether that structure sat outside the credit regime or still attracted licensing and fee rules.

The penalty decision is especially useful because the Court accepted the respondents had obtained legal advice and honestly believed the model could trade lawfully. That reduced the penalty that might otherwise have been imposed, but it did not remove penalty exposure. The Court still ordered $7 million in total penalties because the model operated outside the consumer credit protections that should have applied.

For businesses building lending, earned-wage, instalment, fee-funded or credit-adjacent products, the message is practical: get advice early, document it, but also be ready to redesign if the model depends on avoiding the protections customers would normally get.

Checks to run

Key points

  • Map each entity's role in any lending or payment product before launch.
  • Test fees, service charges and default charges against the National Credit Code.
  • Keep legal advice current when product intervention orders or anti-avoidance rules change.
  • Do not assume a consumer credit model is safe because fees sit in a separate agreement.
  • Prepare a remediation plan before scale if regulatory risk is unresolved.

Key takeaways

  • Splitting a credit model across entities does not remove credit-law risk by itself.
  • Legal advice can reduce penalty exposure, but it will not validate a model the Court finds unlawful.
  • Directors should understand the licensing, fee cap and product intervention risks before launch.
  • If a model relies on customers signing a separate services agreement, check the commercial substance of the whole arrangement.

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