Regulatory update

Sunshine Loans ordered to pay $5.5 million for illegal fees: lessons for lenders

The Federal Court has penalised small amount lender Sunshine Loans $5.5 million for charging a $35 fee the National Credit Code didn’t allow. The way it fought the case made things worse.

On 6 November 2026, the Federal Court ordered Sunshine Loans Pty Ltd to pay $5.5 million in civil penalties for including a prohibited fee in its small amount credit contracts (SACCs), and for charging and accepting it. The decision is ASIC v SunshineLoans Pty Ltd (No 4) [2026] FCA 1628.

The fee itself was small. The case wasn’t. It ran for more than four years, went to the Full Federal Court and the High Court, and ended with a judge finding that the lender’s approach to the litigation said something about its compliance culture. For any lender, there are lessons here about fees, and about how you respond when ASIC says you’ve got it wrong.

What happened

Sunshine Loans was one of the largest providers in the SACC market. Its contracts included a $35 fee, first called a “rescheduling payment fee” and later an “amendment fee”, which customers paid when they agreed with Sunshine to move a repayment date. They weren’t in default when it was charged.

According to ASIC’s media release, between July 2016 and November 2020 Sunshine entered into more than 670,000 SACCs containing the fee. It required payment more than 12,000 times and received it more than 8,000 times, collecting almost $300,000. It stopped charging the fee in November 2020, shortly after ASIC intervened, without admitting liability.

Why the fee was illegal

SACCs are tightly regulated. Under the National Credit Code, a SACC provider can’t impose fees or charges other than:

• an establishment fee
• a monthly fee
• a fee or charge payable if the borrower defaults in payment, and
• a government fee, charge or duty.

Sunshine argued its fee fitted within the rules. The Court disagreed. Because the fee was payable when the loan terms were amended, and not in the event of a default, it wasn’t a permitted fee under s 31A of the Code. Including it in contracts contravened s 24(1A)(a), and charging and accepting it contravened s 24(1A)(b). Those contraventions also meant Sunshine breached its general obligation under s 47(1)(d) of the National Consumer Credit Protection Act 2009 (Cth) to comply with the credit legislation.

The Court also noticed that the fee’s name changed from “rescheduling payment fee” to “amendment fee” in June 2018. The relabelling made no difference. What matters is what the fee is charged for.

The penalty

Civil penalties only applied to these provisions from 13 March 2019, so the penalty covered conduct from then until November 2020. In that period, Sunshine received about $113,000 from the fee. The Court ordered:

The penalty is payable in two equal instalments in February and May 2027.

What pushed the penalty up

The penalty is nearly 50 times what Sunshine collected in the penalty period. A few parts of the judgment explain why.

The way the case was fought

Sunshine was entitled to put ASIC to proof. But the judge found many of its arguments, especially those on jurisdiction and standing, were devoid of merit to the point of being potentially disingenuous. He said the way it ran the case sat uneasily with its claim that it had simply relied on wrong legal advice, and that its approach showed limited insight into the seriousness of the conduct. That counted against it on specific deterrence.

Legal advice only went so far

Sunshine relied on legal advice it said it had received when introducing the fee. The Court allowed some mitigation for that, but not much. The judge had difficulty with evidence from Sunshine’s director, including about how the fee’s name came to be changed in its contract terms. He also said that a lender so familiar with the Code would ordinarily be expected to get specific advice on whether a fee like this was legal.

Remediation came late

Sunshine refunded affected customers after the liability judgment, extended the refunds back to November 2013, and later paid interest at the RBA cash rate plus 6%. The Court gave that some credit. But it was considerably outweighed by the nature and length of the conduct and the limited weight of Sunshine’s compliance measures.

Lessons for lenders

This case is about SACCs, but the lessons apply to any credit provider, whether you lend to consumers or offer buy now pay later, medium amount or other regulated credit:

• audit your fees against the law. For SACCs, the Code sets out exactly what you can charge, and anything outside that list is prohibited, however small. Other contracts, such as medium amount credit contracts, have their own caps
• look at what the fee is for. A “convenience” or “admin” fee for something the customer asks for, like moving a payment date, isn’t a default fee just because it relates to repayments
• don’t rely on the label. Renaming a fee won’t change its legal character, and it may draw attention to it
• get specific advice, and keep it. If a fee’s legality is uncertain, get written advice on that fee, and make sure your evidence of it will hold up
• think about how you’ll litigate. Running every technical point can increase your costs and your penalty, and a court can treat it as evidence of your compliance culture
• remediate early. Refunds with interest, made promptly, carry more weight than refunds paid after you’ve lost.

Fees and pricing are firmly on ASIC’s radar. See our recent updates on ASIC suing CBA over CommBiz fees and ASIC’s final warning on lead generators, and our consumer credit services.

If you’re a borrower

If you had a loan with Sunshine Loans and you’re concerned you were charged the fee, ASIC says you can complain to the Australian Financial Complaints Authority (AFCA). AFCA’s service is free.

Frequently asked questions

This article is general information only and is not legal advice. Please contact us for advice about your circumstances.

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