Consumer advocates praise court decision against Cigno loans

Consumer advocates have welcomed a Full Federal Court decision striking down a credit law avoidance strategy used by Cigno Pty Ltd and BHF Solutions.

For years, fringe lender Cigno has preyed upon consumers in financial hardship, signing people up to short-term personal loan arrangements using lending models that sought to fall within exemptions to national credit laws, charging consumers astronomical fees well above the maximum allowable under any form of regulated credit.

Yesterday, the Full Court found that, despite the loans being provided by lender BHF Solutions, the “Financial Supply Fee” Cigno Pty Ltd charge for each loan arranged is a charge “made for providing credit”. This means the complex lending model is captured by the National Credit Code, despite there being two contracts.

In its ruling, the Court said the National Credit Code exists “to protect consumers from unscrupulous and unfair lending practices”, and described the total fees charged by Cigno and BHF Solutions as very high “on any view”.

“The Full Federal Court has looked to the purpose of our National Credit Laws, which is for consumer protection, to interpret the National Credit Code in a way that limits avoidance techniques,” said Gerard Brody, CEO Consumer Action.

“In essence, the court upheld what community lawyers and financial counsellors have known for a long time – that the Cigno and BHF Solutions lending model charged egregious amounts for credit and therefore should be regulated. The charges are eye-watering, with fees often more than 1000 percent of the original loan application,” he said.

This decision, while positive, underscores the many exemptions, loopholes and complexities that exist in National Credit Laws.

“The Australian Securities and Investments Commission (ASIC) initially took this action in September 2020—it has taken nearly two years to get to this stage, and the matter is still to be finally determined. While we applaud ASIC for taking this on, we need to remove exemptions in our credit laws that enable businesses to exploit loopholes in the first place,” Mr Brody said.

“The Financial Services Royal Commission recommended that exceptions and qualifications in financial services law be eliminated. This would future proof the legislation against the ongoing development of harmful products that would otherwise fall outside of regulation.

“We also need strong anti-avoidance provisions in our credit laws—this will help the regulator address recalcitrant and exploitative business models such as those practiced by Cigno Loans,” he added.

Consumer advocates also called for steps to be taken so that people who have been excessively charged by Cigno while it operates unlicensed can be refunded. They also pointed to the expired product intervention order made in relation to Cigno’s other avoidant lending model and said that it needed to be remade urgently.

“We know that Cigno will continue to try and subvert the law, so all regulatory tools the Government and ASIC have at hand must be brought to bear, to stop these predatory lenders for good”.


Media contact: Mark Pearce, Media and Communications Adviser          T: 0413 299 567,


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