Commerce Commission intends 'case stated' civil proceedings to clarify if Harmoney's platform fees are covered by the CCCFA
Harmoney has been advised that the Commerce Commission intends to commence civil proceedings in the High Court by way of “case stated” to clarify whether the platform fee charged by Harmoney to borrowers from its marketplace platform is subject to the Credit Contracts and Consumer Finance Act 2003 (CCCFA). The case stated procedure is rarely used and enables the courts to provide a ruling on the interpretation of a particular law.
Harmoney is a start-up company competing with the major banks in a new, highly regulated industry. Neil Roberts, Harmoney’s Joint CEO, says, “Prior to launching the Harmoney peer to peer marketplace, we documented the business model in detail following extensive legal advice and working with all stakeholders during the licensing process prior to being granted our peer to peer licence by the Financial Markets Authority. As the first peer to peer provider to seek and obtain a licence, we consulted with the Commerce Commission and MBIE providing them with full details of our business model including detailed information about fees.
Mr Roberts adds, “From the time the Commerce Commission decided to consider further the application of CCCFA as it may apply to P2P lending providers, which was sometime after our licence had been provided and the marketplace was in operation, Harmoney has been cooperative with the Commission.
“Thousands of New Zealanders borrow and lend every day on the Harmoney platform and we have gone about building, launching and operating the platform in exactly the manner anticipated by the new legislation that made p2p platforms possible in New Zealand. Harmoney has built a highly transparent and interactive marketplace since it became the first operator in this new area of financial services in New Zealand.”
For the year to 31 March 2016, Harmoney recorded a loss of $14.2 million before tax on revenues of $8.6 million. Mr Roberts says, “We have invested heavily in the platform to open up a new asset class for retail investors and a frictionless experience for borrowers, a genuine alternative that creates competition in the financial markets. Like many tech start-ups we are not yet turning a profit, and continue to invest as an innovator in the P2P lending market.”
Harmoney chairman David Flacks says – “The peer to peer industry is new to New Zealand and is growing fast both in New Zealand and globally. It offers benefits both to borrowers and lenders over traditional lending options. Harmoney was the first licensed peer to peer platform in New Zealand and is the largest. It is disappointing that the Commerce Commission is seeking to clarify the legal position, as it affects the entire peer to peer industry, by bringing this case stated action using Harmoney’s operating model as the basis for the judicial review.”
“I am committed to ensuring that Harmoney complies fully with all laws and regulations. It is highly problematic however when interpretation of each law by government departments results in a lack of clarity as to how the regulatory framework applies overall to p2p platforms. For this reason we have also met with the Commerce and Consumer Affairs Minister Paul Goldsmith to request that this issue be clarified by an appropriate legislative change”.
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Harmoney is an online direct personal lender that operates across Australia and New Zealand providing customers with unsecured personal loans that are easy to access, competitively priced (using risk-adjusted interest rates) and accessed 100% online.
Harmoney’s purpose is to help people achieve their goals through financial products that are fair, friendly, and simple to use.
Harmoney’s proprietary digital lending platform, Stellare™, facilitates its personalised loan product with applications processed and loans typically funded within 24 hours of acceptance by the customer. Stellare™ applies a customer’s individual circumstance to its data-driven, machine learning credit scorecard to deliver automated credit decisioning and accurate risk-based pricing.
- Harmoney provides risk based priced unsecured personal loans of up to $70,000 for three or five year periods to customers across Australia and NZ
- Its direct-to-consumer and automated loan approval system is underpinned by Harmoney’s scalable Stellare™ proprietary technology platform
- A large percentage of Harmoney’s originations come from 3R™ (repeat) customers
- Harmoney is comprised of a team of ~80 full-time employees across Australia and New Zealand, over half of whom comprise engineering, data science and product professionals
- Harmoney is funded by a number of sources including two “Big-4” bank warehouse programs across Australia and New Zealand and a facility from M&G Investments