Payday lender Cigno appeals ASIC ban on ‘predatory’ loan model

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Controversial short-term lender Cigno is seeking to overturn the ban on its lending model after the corporate regulator called it a “predator.”

The Gold Coast-based lender on Friday asked the Federal Court to review the Australian Securities and Investments Commission (ASIC) ban that was imposed in September.

When enforcing the ban, ASIC expressed concern over a situation in which two companies worked together to circumvent responsible lending laws and charge interest and fees of up to 1,000% of the original amount. borrowed.

The financial regulator said this model has been used by Cigno and Gold-Silver Standard Finance, and more recently by MYFI Australia and BHF Solutions.

Court documents reveal that Cigno is seeking an order to overturn the ban, to have it declared invalid and for costs. In the documents, the company says it has managed 300,000 loans in the past year under the loan model.

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Cigno argues in its application that its lending model is not covered by ASIC’s powers over financial products; that ASIC had failed to demonstrate that the loans themselves caused significant harm to customers; and that ASIC “cared and only” Cigno and Gold-Silver as companies when making its ban decision rather than considering a product.

ASIC said it is reviewing the request and that the ban, which went into effect on September 14, will remain in effect while the case is in court.

Cigno explained in the Gold-Silver documents, whose sole administrator is John Swanepoel, provides short-term loans to customers charging less than 5% fees for loans up to 62 days and 24% annual interest, which means the business is exempt from responsible lending laws. .

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