iscover 
The penalty relates to small amount lender Sunshine Loans, which the court found had charged borrowers an unlawful $35 amendment fee for rescheduling loan repayments, even when they were not in default.
Having been in operation for 25 years, Sunshine Loans currently provides cash loans of $2,050 to $3,500 over loan terms between 63 and 182 days.
Between July 2016 and November 2020, the lender entered into more than 670,000 contracts that contained the fee, prohibited under the National Credit Code.
Sunshine Loans charged the fee on more than 12,000 occasions and received payment more than 8,000 times, collecting almost $300,000 from consumers and attracting the scrutiny of the Australian Securities and Investments Commission (ASIC).
Fees charged to borrowers
The $35 amendment fee was charged when customers agreed with Sunshine Loans to change the date of a repayment, despite not being in default.
Under the National Credit Code, small amount credit contract providers are prohibited from imposing fees other than an establishment fee, monthly fee, default fee or government fee, charge or duty.
Sunshine Loans stopped charging the fee in November 2020, shortly after ASIC intervened, although the lender did so without admitting liability.
ASIC began proceedings against the lender in June 2022, following a review of the small amount credit contract market during the COVID-19 pandemic.
In April 2024, the Federal Court found Sunshine Loans had breached the law by imposing, charging and accepting the prohibited amendment fee.
The penalty hearing was initially scheduled for July 2024, but Justice Derrington recused himself from determining the penalty.
ASIC appealed the recusal decision, while Sunshine Loans appealed the court's liability findings. The Full Federal Court determined both appeals in ASIC's favour in March 2025.
Sunshine Loans subsequently appealed the Full Court's decision on the recusal issue to the High Court, which unanimously dismissed the appeal in March 2026. The matter then returned to Justice Derrington for determination of the penalty.
In addition to the $5.5 million in civil penalties, Sunshine Loans was ordered to pay ASIC’s costs in the case.
Court criticises lender's conduct
Justice Derrington found Sunshine Loans' contraventions were serious and deliberate, noting that conduct which has the purpose or effect of exploiting financially vulnerable consumers or intensifying their hardship warrants substantial general deterrence.
The judge also criticised the lender's approach to the proceedings and appeals, saying “many of the arguments advanced … were devoid of merit to the point of being potentially disingenuous”.
Derrington added that this partly indicated a poor culture of compliance, which needed to be reflected in the penalty.
ASIC Commissioner Alan Kirkland said the outcome reflected the regulator's enduring enforcement priority to protect financially vulnerable consumers from serious harm.
“People who rely on small loans are often already under financial pressure, using them to meet essential or unexpected expenses. Unlawful fees only add to that pressure,” he said.
“These were people turning to small loans to pay for things like funerals, vehicle registration, school fees, medical procedures, and Christmas presents.”
Kirkland continued to say that many of the people who took out the loans had overdrawn accounts at the time.
“These consumers should not have been charged fees prohibited by law, and lenders who disregard these protections should expect ASIC to take action.
“Sunshine Loans fought this case at every turn, including through highly technical legal arguments and appeals. The Court indicated that Sunshine Loans' many unmeritorious arguments prolonged the litigation and significantly increased the costs associated with it.
“ASIC remained committed to seeing this matter through and securing an appropriate outcome for consumers.”
Payday lenders remain under scrutiny
ASIC’s pursuit of Sunshine Loans comes amid what has been a broader crackdown by the regulator on payday lenders in recent years.
On March 2025, ASIC announced that it was placing added focus on small credit lenders in a bid to minimise financial harm to vulnerable consumers.
ASIC said that some of these lenders are breaching obligations by “entering into unsuitable contracts with consumers or failing to identify an appropriate target market and distribute their products accordingly.”
In September 2026, the online payday lender CashnGo was ordered to pay a $3.5 million penalty after the Federal Court found it used and relied on unfair terms that enabled unannounced withdrawals from borrowers’ bank accounts.
Then, in April 2026, ASIC secured a combined penalty sum of $7 million against Cigno Australia and BSF Solutions, relating to their use of the “No Upfront Charge Loan Model”.
ASIC said that the model provided $34 million in short-term loans to over 100,000 customers between July 2022 and December 2022, generating tens of millions back in fees.
The regulator later appealed the Federal Court’s $7 million penalty order, arguing that the penalty fell short of the money drawn from customers.
[Related: ASIC warns auto finance lenders to raise standards]
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