MyCRA Specialist Credit Repair Lawyers

Tag: payday lenders

  • Sunshine Loans vs ASIC

    Sunshine Loans vs ASIC

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    TL;DR Summary

    Sunshine Loans lost an appeal against ASIC in the Federal Court for charging customers an unlawful $35 “Amendment Fee.” The Court said Sunshine Loans shouldn’t have charged this fee because it wasn’t specifically tied to customers missing repayments. Thousands of customers may now be able to request a refund directly from Sunshine Loans, and affected customers could also seek credit repair if their credit rating was harmed by this issue.

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    Sunshine Loans vs ASIC: Everything You Need to Know (and How it Affects You)

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    On 24 March 2025, a major ruling was handed down by the Federal Court of Australia. The case was Sunshine Loans Pty Ltd v Australian Securities and Investments Commission [2025] FCAFC 34. This case has big implications for anyone who’s ever had a small loan with Sunshine Loans—or similar lenders—and been charged fees for changing repayment dates.

    Let’s break it down clearly, so you understand what happened, why it matters, and what steps you can take next.

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    The Background – What Started All This?

    Sunshine Loans is a company providing small loans—known as small amount credit contracts. Like many similar lenders, they often charged customers a $35 fee whenever a repayment schedule was amended or changed.

    ASIC, Australia’s main consumer protection regulator, argued this fee was unlawful under Australian credit laws because lenders are strictly limited in what fees they can charge.

    The issue in this case was specifically whether Sunshine Loans was allowed to charge these $35 “Amendment Fees” just because a customer wanted to change their repayment date, or whether fees like these were only permitted if a customer defaulted (missed a payment or breached the contract).

    What Did the Court Decide?

    The Federal Court (and later the Full Federal Court on appeal) ruled in favour of ASIC and against Sunshine Loans.

    Here’s why:

    1. When is a Fee Allowed?

    According to Australian law (National Consumer Credit Protection Act 2009 and National Credit Code), lenders can only charge certain fees clearly allowed by law. One allowed category is a fee charged if a borrower defaults—meaning they miss a payment or break their agreement.

    2. What Was Wrong with the Sunshine Loans Fee?

    Sunshine Loans claimed their $35 “Amendment Fee” was charged because customers were effectively in default—they argued that customers changed repayment dates because they couldn’t pay on time.

    However, the Court rejected this argument clearly and strongly. It said the law is clear: fees can only be charged specifically because of a default (like missed payments), not simply because customers want to reschedule payments.

    The Court clarified:
    Just being late, or changing repayment dates does NOT automatically mean the borrower defaulted.

    3. Why is This Important?

    This decision clearly defines the limits on lenders charging fees. It means lenders can’t disguise fees simply as “amendment” or “rescheduling” fees if they’re not clearly tied to actual defaults.

    Key Details from the Judgment

    • Sunshine Loans breached the law every time they entered into contracts that included the unlawful $35 Amendment Fee.

    • They unlawfully charged this fee over 12,000 times and actually collected payment from customers over 8,000 times.

    • Each of these fees represented a breach of the law.

    These breaches mean affected customers can potentially ask Sunshine Loans directly for refunds of these fees.

    What Does This Mean for Customers?

    If you had a loan with Sunshine Loans and were charged this Amendment Fee, you might be owed a refund.

    • You have the right to contact Sunshine Loans directly and ask them for a refund.

    • Even if you agreed to pay the fee at the time, the Court said clearly that if a fee is unlawful, your agreement does not make it legal. You can still seek a refund.

    • If this situation negatively affected your credit rating (for example, if the fee caused you financial difficulties or led to other problems on your credit file), you have options to fix your credit report.

    Your Next Steps

    If you think you were affected:

    1. Contact Sunshine Loans

    • Ask directly for a refund of the Amendment Fees charged to your account.

    • Quote the judgment: “SunshineLoans Pty Ltd v ASIC [2025] FCAFC 34”.

    2. Check your Credit File

    • If you’ve faced negative consequences like defaults or late payments on your credit file due to this issue, it’s important to review your credit file thoroughly.

    3. Seek Expert Credit Repair Help

    • At MyCRA Lawyers, we specialise in helping Australians remove unfair negative marks from their credit reports.

    • If you’ve faced credit issues due to unfair fees like these, contact MyCRA Lawyers. Our expert team can assess your case, explain your options clearly, and help protect your financial future.

    Final Thoughts – Why This Matters for All Australians

    This judgment reinforces strong consumer protection rules in Australian credit law. It sends a clear message to all lenders:

    • You must follow the rules clearly.

    • You cannot charge fees unless they’re directly tied to a default.

    • Customers deserve transparency and fairness in all lending agreements.

    By understanding decisions like these, you stay informed and empowered. Remember, if you’ve been affected, don’t hesitate to reach out for professional assistance.

    Need Help With Your Credit File?
    Contact MyCRA Lawyers now at 07 3124 7133. We’re here to educate, assist, and protect your credit health.

    Book your appointment now at https://mycralawyers.com.au/book-in

    Ref: SunshineLoans Pty Ltd v ASIC [2025] FCAFC 34

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  • Payday lending: why it’s all about to change

    payday loansThe number of payday lenders is about to shrink due to new regulations, according to  Paid International (formerly First Stop Money). Is this a good thing for those people on the fringe? We look at what the changes are, how they will impact borrowers and those people who don’t have access to mainstream credit due to bad credit.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair and www.fixmybadcredit.com.au.

    Last year the Australian Government decided to start restricting interest charges to payday lenders through the Consumer Credit Legislation Amendment (Enhancements) Bill 2012 which changed the playing field for payday loans, as well as rules around financial hardship. The Government wanted to “stop loan sharks from exploiting vulnerable Australians,” Financial Services Minister Bill Shorten said in a statement to the media following the Bill’s passing in Parliament.

    “The Gillard Government has moved to reduce the financial harm caused by lenders who ruthlessly impose excessive fees and charges simply because vulnerable consumers cannot obtain alternative access to credit,” he added.

    The Enhancements Bill introduced a cap for small amount credit contracts where the amount borrowed is $2000 or less, and the term is 1 year or less. For these loans the maximum any lender can charge is an establishment fee of 20 per cent of the amount of credit upfront and 4 per cent for each month of the loan. This provides for maximum charges of $72 on a loan of $300 over 1 month.

    As Banking Day reported last week in its story ‘Payday loan market in transition‘, the introduction of interest rate caps is the second piece of major regulation directed at the payday lending industry this year. The other change will be in the area of credit assessment – intending to ensure potential borrowers aren’t over-obligated.

    Providers of small-amount credit contracts must review clients’ bank statements for the previous 90 days to verify their income. Loans with terms of less than 16 days are prohibited, unless it is an authorised deposit-taking institution offering a continuing credit contract.

    A loan will be presumed to be unsuitable if the applicant is in default under another small-amount credit contract or has been a debtor under two or more small-amount credit contracts within the previous 90 days.

    If a borrower receives 50 per cent or more of their gross income from Centrelink, no more than 20 per cent of their income can be allocated to loan repayments.

    The changes to payday lending taking place now are predicted to force the industry to “change dramatically over the next few years”.

    The chief executive of Paid International, Tim Dean predicts that payday lending will as an industry, consolidate.

    “Only a small number of very efficient operations will find the new rules workable,” he told Banking Day.

    Paid International has recently changed its name from First Stop Money, which was reportedly part of a re-positioning of the business.

    Dean said that over the next few months Paid International would launch a suite of new products aimed at “middle Australia”.

    “Our customers are not Centrelink clients,” he said.

    In an emergency situation, people who are stuck with bad credit often turn to payday loans. Including those people that aren’t able to obtain a hardship variation for their circumstances, and have a default or other negative listing (or even too many late payment notations as of next year) placed on their credit file.

    Capping the interest rate on pay day loans is a fair move, and restriction on access for those over-committed Australians is also probably a good idea. But I see the bigger picture. Some people who are forced into these situations are there because the system has failed them. Not all defaults deserve to be there, but they all have the same outcome for prospective borrowers. They are banned from obtaining mainstream credit.

    Where people are getting let down is in copping the mistake in the first place, and also in the correction of the credit reporting mistake. Whilst the powers that be say that there is a legitimate avenue for correcting credit reporting mistakes for the individual, any consumer who has had the pleasure of dealing with a big company for even small issues will attest to the difficulty in getting a straight answer, getting someone who knows what they’re talking about first time, and ultimately correcting the mistake. This is a common complaint of many of our credit repair clients. Most people are told if it’s paid up they can mark it as such but that’s about it.

    So whilst I applaud the new laws, they can’t be looked at exclusively. Whether we’ll have a fairer credit system for all Australians remains to be seen following the implementation of amendments to the Privacy Act in March. Whether Australians will get a ‘fair go’ or find themselves in new hot water – is what we’ll be looking at closely over the next couple of years.

    If you have been refused mainstream credit and need help with disputing a credit listing you believe is unjust, unfair or just shouldn’t be there, contact a Credit Repair Advisor on 1300 667 218.