ASIC has commenced proceedings against Cigno Australia and its associate BSF Solutions, alleging they provided credit without a licence. It was only three months ago that ASIC won a case against a pair of related parties over a similar matter. In the latest claim, ASIC alleges that Cigno and BSF established a lending model that was designed to avoid the application of the National Consumer Credit Protection Act and the National Credit Code. The case covers more than 100,000 short-term loans provided between July and December last year. ASIC also alleges that Cigno charged excessive fees. In the earlier case, BHF Solutions offered consumer credit and had an arrangement with Cigno Pty Ltd to provide “loan management facilitation”. BHF’s fees were only A$15 per loan but Cigno’s fees for such services as assisting with loan applications and arranging for a customer’s account to be debited could be very high relative to the size of a typical loan.  Converted to an annualised percentage rate, the fees being paid by some borrowers were as high as 800 per cent. BHF and Cigno argued that their business model fell within an exemption to the application of the National Credit Code. One of the exemptions under the National Credit Code is that it does not apply to the provision of credit under a continuing credit contract if the only charge that is made is a periodic fixed charge that does not vary according to the amount of credit provided. The maximum charge is $200 over a 12-month period. Cigno argued that its fees were for services provided to the borrower and were not part of a credit contract. Ultimately, the Federal Court rejected that view, finding that at least some of the fees were charged for providing credit. In July, the court permanently restrained BHF from providing credit, including providing a line of credit to consumers; providing advances of funds to consumers; and collecting and receiving monies corresponding to repayments for amounts advanced by and/or fees charged by BHF. In the meantime, Cigno Australia and BSF launched a “no upfront charge loan model” that had similar characteristics. BSF provided the loan but received no interest or fees. Cigno’s facilitation agreement with borrowers involved the payment of account keeping fees, default fees, change of payment schedule fees. ASIC’s arguments are similar to those in the earlier case. It says BSF supplied credit and the account keeping fees and change f payment schedule fee was “a charge that is or may be made for providing the” BSF credit. It also argues that by trying to avoid regulation under the Credit Act, Cigno and BSF caused consumer harm in the form of excessive fees.