A $35 Fee Charged 12,693 Times Cost Sunshine Loans $5.5m. About $113,000 of the Fee Income Sat Inside the Penalty Window

On 6 November, ASIC announced that the Federal Court had ordered Sunshine Loans Pty Ltd to pay $5.5 million in civil penalties, plus ASIC’s costs, over a $35 fee.

Across the whole period in question — 1 July 2016 to 2 November 2020 — the company received $293,160 from that fee. ASIC’s release puts the amount received inside the window in which civil penalties were actually available at about $113,000. The penalty is roughly 19 times the first figure and roughly 49 times the second.

That ratio is the reason this matter is worth a broker’s attention. A penalty that lands at 49 times the money involved was not calculated from the money. It was calculated from how many times one document defect repeated, from a finding that the conduct was deliberate, and from how the company behaved once it was challenged. All three of those drivers are available to a brokerage with a fee sitting in a template and no clause standing behind it.

What the court decided

The fee started life in the contract’s financial table as a “rescheduled payment fee” of $35.00, listed under the heading “other fees and charges retained by us”. Later versions of the document relabelled it an “amendment fee”. It was charged when a borrower asked to move a repayment date, including where the borrower was not in default.

Small amount credit contracts sit under a strict fee regime in the National Credit Code. The permitted categories are narrow, and the one the lender needed was s 31A(1)(c), which allows “a fee or charge that is payable in the event of a default in payment under the contract”. In the liability judgment — Australian Securities and Investments Commission v SunshineLoans Pty Ltd (No 2) [2024] FCA 345, delivered by Derrington J on 12 April 2024 — the court held the amendment fee did not fit that category. The obligation to pay it arose because the parties agreed to vary the loan, not because the borrower had defaulted.

The court drew the line tightly: a fee of that kind has to be conditioned on a default in payment on every occasion. An event that merely happens to occur while a borrower is in default is not enough by itself.

Once the fee was prohibited, the rest followed. It became a monetary liability prohibited by s 23A(1), which engaged s 24(1A) of the Code: a credit provider must not enter into a small amount credit contract on terms imposing such a liability, and must not require or accept payment of it. ASIC also pleaded s 47(1)(d) of the National Consumer Credit Protection Act 2009 — the licensee obligation to comply with the credit legislation. That last provision is the one that should hold a broker’s eye, and we come back to it below.

Why the penalty is 49 times the money

Three things drove the size of this outcome, and none of them is revenue.

First, the term rather than the transaction. On the agreed facts, 670,609 small amount credit contracts were entered into during the relevant period containing the fee. What s 24(1A)(a) prohibits is entering into a contract on terms that impose a prohibited liability. The breach is in the paper, not in the payment. The 12,693 occasions on which the fee was charged and the 8,376 occasions on which it was paid are a small subset of the contracts that carried it.

That is a different exposure model from the one most licensees carry in their heads. The instinct is to measure risk by the number of clients who were actually charged something they should not have been. Here, the population at risk was every contract written on the template.

Second, deliberateness. ASIC’s release states that the judge found the contraventions serious and deliberate. In civil penalty proceedings, a finding of that kind moves the number far more than the dollar value of the conduct does.

Third, conduct after the fact. ASIC’s release quotes the judge describing the company’s arguments as “devoid of merit to the point of being potentially disingenuous”, which he said indicated a poor culture of compliance. Reporting on the penalty judgment on 6 November, the legal publication Lawyerly said the judge gave limited weight to the company’s claim that it had relied on legal advice when it introduced the charge. That detail appears in Lawyerly’s report and not in ASIC’s media release, so treat it as that outlet’s account of the reasons rather than an established finding until the judgment itself is available.

The clause that wasn’t there

The most portable detail in the liability judgment is also the least dramatic. The fee appeared in the financial table. It was not explained in the contract terms. No clause said when it became payable.

The contrast the court drew was with the same document’s other fees. The default fee and the dishonour fee were each tied to specific clauses that said what triggered them. The amendment fee was a number in a table, floating free of any operative provision.

Relabelling it did not help. A “rescheduled payment fee” and an “amendment fee” are the same charge with different words on it, and the question the court asked was not what the fee was called but when and why the obligation to pay it arose. Substance over label is not a new principle. What is useful here is seeing exactly where the substance was found: in the presence or absence of a clause.

For a brokerage, the equivalent question is uncomfortably easy to ask and surprisingly hard to answer. If you charge a fee for service, a restructure, an application, a cancellation or a re-lodgement, you can almost certainly point to the amount. Can you point to the clause in the document the client signed that says what triggers it, and does that trigger match what your staff actually do?

13 March 2019

The conduct ran from July 2016. Civil penalties were only available for it from 13 March 2019, which is why about $113,000 of the $293,160 collected sits inside the penalty window and the rest does not.

Nothing about the document changed on that date. The exposure attached to it did.

Brokers have their own version of this. The best interests duty and the obligation to prioritise consumers’ interests commenced on 1 January 2021, introduced by the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020 and explained in ASIC’s Regulatory Guide 273. A fee schedule, engagement letter or credit guide drafted before that date was not grandfathered by its age. If a document was written for one regulatory regime and is still being issued under another, the date on the template is a question, not a defence.

Where this reaches your licence

Section 47 of the National Consumer Credit Protection Act sets the general conduct obligations of credit licensees. It does not distinguish between a lender and a broker. Three of its paragraphs are worth reading alongside this case:

• s 47(1)(a) — do all things necessary to ensure that the credit activities authorised by the licence are engaged in efficiently, honestly and fairly.
• s 47(1)(d) — comply with the credit legislation. This is the provision ASIC pleaded against Sunshine Loans alongside the Code breaches.
• s 47(1)(e) — take reasonable steps to ensure that representatives comply with the credit legislation.

Paragraph (e) is the one that should concentrate the minds of anyone running a brokerage with credit representatives underneath them. A defective fee document issued under your authorisation by someone else is not someone else’s problem. It is a reasonable-steps question directed at you, and the answer lives in whether you ever checked the documents your representatives are actually handing clients, as against the ones head office approved.

If you operate as a credit representative yourself, the mirror image applies: the documents you use are your licensee’s responsibility to supervise, which means the fastest route to an answer about a fee you are charging is usually to ask them to point you to the clause.

What ASIC has said about broking

ASIC Commissioner Alan Kirkland, delivering the keynote address at the Credit Law conference on 14 October 2025, said ASIC was examining mortgage brokers’ compliance with the best interests duty and their complaints handling, together with the supervision practices of large aggregators, and that serious issues could lead to action. The same speech framed ASIC’s approach as outcomes-led rather than organised by credit type or business type — action taken wherever credit-related misconduct appears.

Read against the Sunshine Loans outcome, that framing is the relevant signal. The regulator pursued a $35 fee through a liability hearing, two appellate courts and a penalty hearing across more than four years, for a total benefit to the defendant of under $300,000. Proportionality to the money was plainly not the test being applied.

The fee-term audit

This is an hour of work for most brokerages, and it is the kind of hour that is far cheaper before anyone asks than after.

If the audit turns up a fee you cannot trace to a clause, the next step is not to quietly stop charging it. It is to take the document to your licensee or compliance adviser, because the question of what to do about fees already charged is a different and more technical one than the question of what the document should say from here.

What to watch next

Three things are worth following from here.

The published reasons. ASIC’s release summarises the judge’s findings; the penalty judgment itself will carry the reasoning on how the figure was built and on what weight reliance on legal advice attracted. For any licensee that has ever relied on an adviser’s sign-off for a document, that passage is the one to read.

ASIC’s broking surveillance. Best interests duty compliance, complaints handling and aggregator supervision were all named as areas of active attention in October 2025. Outcomes from that work are the more direct exposure for the broker channel.

Whether the method recurs. The “fee in the table, no clause in the terms” analysis is a clean and repeatable way to test a fee. If it starts appearing in other credit matters, it becomes a template for how documents get reviewed generally.

The practical significance

A broker reading the headline could reasonably conclude this is a payday lending story. It is, and the specific rules breached will never touch a mortgage file.

But the mechanics are not specific to payday lending at all. A fee was put in a template. The template was used hundreds of thousands of times. Nothing in the terms said when the fee was payable. Years later, a regulator sized a penalty against the repetition and the posture rather than the profit, and arrived at a number roughly 49 times the money received in the relevant window.

The defensible position is not having never made a documentation error. It is being able to show, on request, which document authorises each fee, which clause triggers it, when the client was told, and when the template was last reviewed against the law as it now stands. That is a file-and-template question, and it is answerable this week.