An investment group chaired by former Brisbane lord mayor Sallyanne Atkinson has previously bankrolled a payday lending operation, BHF Solutions, that is accused by the corporate regulator of charging outrageously high fees.
Skybound Fidelis Investment loaned $20m to Gold Coast-based lender BHF Solutions in July last year, the Australian Securities and Investments Commission said in a federal court lawsuit filed on Wednesday. Skybound said the loan has been repaid and it has no ongoing relationship with BHF.
In the lawsuit, the regulator accuses BHF and another Gold Coast company, Cigno, of breaking the law by providing credit without a licence under arrangements in which customers were charged fees totalling up to six times the amount borrowed.
Cigno, which used a business model that Asic has previously tried to ban, reaped $78m in fees from borrowers between September last year and August this year, Asic said in a statement filed with the court.
Cigno, which touts itself as offering “emergency cash” loans, is controlled by former rugby union player Mark Swanepoel, and owned by members of the Swanepoel family.
Atkinson, a prominent Queensland Liberal who was Brisbane’s first female mayor, told Guardian Australia that Skybound was no longer involved with BHF or Cigno, but that she could not recall when the relationship ended.
“That loan’s all been paid back, and we’re not having any further dealings with them, not because there’s anything wrong with them but because it’s all been paid back,” she said.
Skybound chief executive Dean Palmer said in an email: “Please note that Skybound Fidelis no longer provides any loan funding to, nor does it have any ongoing relationship with, BHF or Cigno.”
BHF and Cigno have been contacted for comment.
Asic’s federal court lawsuit is the second time the regulator has tried to shut down businesses like Cigno.
In September last year, it used new product intervention powers to ban an arrangement where, at the same time as taking out a loan, a borrower agreed to pay large introduction fees to a related company – the business model used at the time by Cigno.
Cigno challenged the ban in the federal court but lost. It has appealed against the judgment, with a hearing due in November.
In the lawsuit filed on Wednesday, Asic said Cigno adopted a new business model after the regulator banned the old one.
Cigno now refers potential borrowers to BHF, which is an unrelated company controlled by a Gold Coast man, Brenton Harrison.
Asic claims the fees charged by Cigno to its tens of thousands of clients exceed the maximums allowed by the law.
These fees, which are charged on loans of as little as $50, include a $5.95 a week “account keeping fee” and a $79 fee if repayments are not made on time.
It said one customer who borrowed $350 was charged $471.30 in fees, while another who borrowed $50 was charged $300 in fees after defaulting on the loan.
The chief executive of the Consumer Action Law Centre, Gerard Brody, welcomed Asic’s latest action against Cigno.
“We are pleased to see Asic taking this important step to enforce existing consumer credit protections and stop Cigno and BHFS from causing further harm by using this unethical lending model,” he said.
“While the loans are commonly only for small amounts, they impose exorbitant fees that left some people purportedly owing amounts many times the value of the original loan, within months.”