Australian company directors have grown accustomed to civil penalty litigation being calibrated against profit. A regulator proves misconduct, a court assesses what the wrongdoer gained, and the penalty reflects some multiple of that gain. It is a familiar framework. ASIC’s appeal in the Cigno matter, filed on 15 May 2026, is squarely aimed at dismantling that comfort.
The implications reach well beyond payday lending.
The Cigno Lending Scheme: $90 Million in Unlawful Fees
Cigno Australia and BSF Solutions operated a lending model that the Federal Court ultimately characterised as a deliberate circumvention of the National Consumer Credit Protection Act. Consumers were charged more than $90 million in fees that were prohibited under credit laws. The companies conducted credit activity without an Australian Credit Licence, denying those consumers important protections.
The scheme was not unsophisticated. The two companies, each controlled by their respective directors, Mark Swanepoel and Brenton Harrison, structured the arrangement to exploit perceived gaps in the credit legislation. Legal proceedings commenced in October 2023. In May 2024, the Federal Court found both companies, and both directors, liable. A Full Federal Court appeal by the companies was dismissed in July 2025. A High Court special leave application was dismissed in November 2025.
On 17 April 2026, the Federal Court imposed a combined penalty of $7 million: $3 million each against Cigno Australia and BSF Solutions, and $500,000 each against the two directors.
ASIC considers that penalty to be insufficient to deter future misconduct of this kind.
Why ASIC Is Appealing: Two Questions With Industry-Wide Consequences
ASIC’s Notice of Appeal, filed 14 May 2026, raises two discrete legal questions. Both matter to every corporate lawyer and every director in Australia.
Question 1: Can a Contravener Rely on Legal Advice in Mitigation Without Producing It?
At the penalty hearing, the respondents sought a reduction in penalty on the basis that they had obtained legal advice before implementing the lending model. The argument, in essence, was that they acted in good faith on the strength of that advice.
The problem is that the advice was never tendered to the Court.
ASIC’s appeal argues that a contravener should not be permitted to benefit from the existence of legal advice as a mitigating factor unless that advice is actually placed before the Court and examined. The logic is straightforward: a court cannot assess whether advice was genuinely relied upon, whether it was reasonable to rely upon it, or what the advice actually said, unless the document is in evidence. Allowing a contravener to invoke the shield of legal advice while keeping its contents confidential creates an unverifiable and untestable claim.
If the Full Federal Court accepts this argument, the mitigation value of “we took advice” will be significantly curtailed in penalty hearings. Contraveners who want to rely on legal advice will need to waive privilege and produce it. That is a meaningful shift in litigation strategy.
Question 2: Is “Benefit Obtained” Gross Revenue or Profit?
This is the question that will send shockwaves through boardrooms if ASIC succeeds.
The primary judge assessed the “benefit obtained” from the misconduct by reference to profit. The joint profits of Cigno Australia and BSF Solutions were approximately $3.7 million. The $7 million penalty therefore represented roughly double the profit figure.
ASIC argues that benefit obtained should be measured by reference to gross revenue, not net profit. On ASIC’s case, the companies collected more than $90 million in unlawful fees. A penalty calibrated against gross revenue would have been of an entirely different order.
Why This Changes the Calculus for Directors
The “benefit obtained” question is not confined to credit law. It runs through the entire civil penalty framework under the Corporations Act 2001 (Cth) and the Australian Consumer Law.
Consider the exposure categories most relevant to Queensland directors and executives:
Directors’ duties breaches (ss 180-184 Corporations Act 2001): A director who causes a company to enter into uncommercial transactions, engages in self-dealing, or acts in bad faith generates corporate revenues that flow through the impugned conduct. If gross revenue becomes the measure of benefit, the penalty base expands dramatically even where net profit is modest.
Misleading or deceptive conduct (s 18 Australian Consumer Law): Companies that run misleading marketing campaigns often collect substantial revenues across large consumer bases before detection. Under a gross revenue model, the penalty exposure for a sustained campaign could be many multiples of whatever net margin the business earned.
Financial services misconduct: Financial services entities collect fees, commissions, and premiums at scale. The difference between a gross revenue measure and a profit measure can be enormous in absolute terms.
The deterrence philosophy underlying civil penalties is deliberate. Penalties set too low become a cost of doing business. ASIC’s position is that pricing misconduct against profit allows sophisticated operators to structure arrangements that remain economically rational even after a penalty is imposed. Gross revenue as the measure removes that arbitrage.
The ASIC Enforcement Environment: A Regulator With Escalating Reach
The Cigno appeal does not exist in isolation. ASIC released data in early 2026 showing a 28% increase in reports of misconduct during the second half of 2025 compared with the first half. In that six-month period alone, ASIC received 9,686 reports of misconduct raising 13,036 separate issues. Corporate governance matters accounted for 40% of those issues.
ASIC has made clear that it regards enforcement as a core strategic priority. The decision to appeal a $7 million penalty that many would consider significant reflects an institutional commitment to establishing precedent, not simply achieving outcomes in individual cases.
Directors and their advisers should read the current environment as one of elevated regulatory risk. The combination of increased reporting, aggressive enforcement posture, and a pending appeal that could rewrite the penalty calculus creates a compliance imperative that is not adequately met by reactive responses to identified problems.
What Queensland Directors and Executives Should Do Now
The Full Federal Court has not yet set a hearing date for the Cigno appeal. The outcome is uncertain. But the responsible approach to uncertainty in the regulatory sphere is not to wait and see.
Audit your compliance frameworks. If your company operates in financial services, lending, or any sector with a significant revenue base, the current penalty framework may understate your regulatory exposure if ASIC’s appeal succeeds. Model the scenarios now.
Understand your personal exposure. Directors of companies engaged in civil contraventions face personal liability. The Cigno directors received $500,000 penalties each, in addition to the company-level orders. Personal exposure under a gross revenue model is a different conversation entirely.
Review D&O insurance. Directors’ and officers’ liability cover should be assessed against realistic worst-case penalty scenarios. If your current coverage was sized against a profit-based model, revisit the adequacy of limits.
Do not rely on legal advice as a shield without understanding the consequences. If ASIC’s first appeal ground succeeds, invoking legal advice in mitigation will require production of that advice. Make sure your legal advice is genuinely sound, documented, and capable of withstanding scrutiny, because you may need to produce it.
Remediation matters. The Federal Court noted that the Cigno respondents had not implemented any remediation program. ASIC specifically highlighted the absence of consumer remediation as a factor relevant to deterrence. Proactive remediation where consumer harm has occurred is both the right thing to do and a meaningful factor in penalty proceedings.
Conclusion: A Pending Judgment With National Significance
The Full Federal Court’s decision in the Cigno penalty appeal will be one of the most consequential civil penalty rulings in the current enforcement cycle. If the gross revenue argument succeeds, the risk landscape for corporate misconduct in Australia changes materially and immediately.
This is not a financial services story. It is a corporate governance story. Every director of every company with a significant revenue base now has reason to pay close attention.
Boss Lawyers advises directors, executives, and companies facing ASIC investigations, civil penalty proceedings, and regulatory enforcement action. If you need strategic advice on compliance frameworks, penalty risk, or regulatory response, contact:
Mark Harley, Principal Boss Lawyers Pty Ltd Phone: 1300 267 711 Web: bosslawyers.com.au Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
Need insolvency advice? If your business is facing financial difficulty, early advice from experienced insolvency lawyers is critical. Boss Lawyers’ insolvency lawyers Brisbane help directors, creditors and stakeholders navigate voluntary administration, liquidation and restructuring options. Call us on 1300 267 711 for a confidential discussion.
Disclaimer: This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances before taking any action. For advice on your specific situation, contact Boss Lawyers on 1300 267 711.
