No new loans available to Harmoney retail lenders from 1 April 2020

After careful analysis of Harmoney’s business model and the company’s strategic direction we have made the decision to close our online lending platform to any new retail lending from 1 April 2020.

This means:

  • No new registrations for lender accounts from 13 February, 2020
  • No new loans to retail investors from 1 April, 2020. A retail lender is any lender (individual, company or trust) who funds loans under the peer‑to‑peer model and is not a large institution, such as a bank.

This does not affect existing loans, and all current retail investments will continue to run out over the life of the loan in accordance with our normal processes.

This is not a decision we have taken lightly but we believe it is the right move to enable Harmoney to continue to lead the way in creating better personal loan products in a highly competitive market.

What’s changing from 1 April 2020:

  • Retail lenders will be unable to invest in new loans with Harmoney.
  • If loans in your portfolio are rewritten or are paid off early, principle and interest repayments back into your account will not be able to be reinvested with Harmoney.
  • Auto-lend will be deactivated on 31 March 2020.

What’s not changing from 1 April 2020:

  • All existing loans funded by retail investors will continue with no change for the life of the loan.
  • Your principal and interest will be deposited into your Harmoney account as your investments repay. The auto-withdraw function is still available to you.
  • Harmoney’s licence from the FMA does not allow Harmoney to re-purchase loans from retail lenders.
  • Regular reporting, including real-time dashboard reporting and tax certificates, will still be available.
  • Harmoney collections policy remains the same.
  • Harmoney Lender Services team are still available to you on investorservices@harmoney.co.nz or 0800 427 666.

What you can do before 1 April 2020:

  • If you wish to stop investing in Harmoney loans before 1 April 2020 we recommend you turn off Auto-lend, if you use this feature.
  • From 1 April 2020, we recommend turning on auto-withdraw, so any returns are automatically paid to your nominated bank account.
  • You may withdraw unallocated funds from your Harmoney account at any time.
 

Frequently asked questions

A retail lender is any lender (individual, company or trust) who funds loans under the peer‑to‑peer model and is not a large institution, such as a bank.

From 13 February 2020, Harmoney will no longer be accepting registrations to become a retail lender on our platform.

If you do wish to continue investing there is no change and loans will still be available for investment by retail lenders up to 31 March 2020.

Withdrawing funds

Can I withdraw funds from my lender account now?

You can withdraw funds from your lender account at any time, through your lender dashboard. We recommend enabling the auto-withdraw feature of your Harmoney account so all unallocated funds are automatically transferred to your nominated bank account.

What happens to any money I have sitting in my account?

You may withdraw these funds at any time. We recommend enabling the auto-withdraw feature so any unallocated funds are automatically transferred to your nominated bank account. Funds sitting in Harmoney accounts do not attract interest.

How quickly will I get my principal back?

All loans currently in your portfolio will be repaid according to their contractually scheduled repayments over the three or five year term of the loan (subject to any earlier repayment, or extension due to a hardship application). There is no change to how these loans will be repaid and managed.

Harmoney’s peer‑to‑peer licence does not allow Harmoney to offer a secondary market (ie. to repurchase loans from retail lenders).

Can I cancel any investments I currently have?

No. Harmoney’s current lender terms will still apply, and loans cannot be cancelled by lenders.

Can I sell my loan portfolio to another investor?

Harmoney’s peer-to-peer licence does not allow Harmoney to offer a secondary market (i.e. to facilitate lenders purchasing loans from other lenders).

Will Harmoney offer to buy out my loans?

Harmoney’s peer-to-peer licence does not allow Harmoney to offer a secondary market (ie. to repurchase loans from retail lenders).

Can I still deposit funds into my Harmoney account?

You can deposit funds into your account up to 31 March 2020. We recommend doing this only if you intend to continue funding loans up to that date. From 1 April 2020, you will no longer be able to fund any loans.

We recommend you activate the auto-withdraw function on your account so any unallocated funds are automatically transferred to your nominated bank account.

Managing existing loans

What does this mean for the current loans in my portfolio?

Any current loans will continue to be repaid over the three or five year term of the loan (subject to any earlier repayment, or extension due to a hardship application), unless the borrower chooses to rewrite (Top Up) their loan, or the loan defaults.

Should an eligible borrower choose to repay their loan in full by taking out a new larger loan, your principal will be repaid to you at the time the original loan is repaid, rather than waiting for the full term. This is unchanged from what occurs today.

From 1 April 2020, you will not be able to reinvest those funds in new loans.

We recommend enabling the auto-withdraw feature of your lender account so funds not invested are automatically transferred to your nominated bank account.

Should loans default after 1 April 2020, Harmoney’s current collections policy will still apply.

Tax certifications and regular reporting will continue.

Will there be any change to Harmoney’s results reporting?

You will continue to receive real time reporting via your Harmoney dashboard. Harmoney will also continue monthly reporting, which is also accessible via your account dashboard. Tax reporting will be annual.

What happens if loans I have invested in are cancelled after 1 April 2020?

If a borrower opts to cancel a loan within the seven day “cooling off period” after settlement, lender funds will be returned to lenders. We recommend activating the auto-withdraw feature of your Harmoney account so any unallocated funds are automatically transferred to your nominated bank account.

What happens if any of the loans I have invested in default or go into arrears after 1 April 2020?

Harmoney’s current collections policy will still apply.

What happens if a borrower repays the loan early?

There is no impact on how Harmoney manages early repayment of loans. In the case of early repayment any funds due will be paid to the lender’s account and will be available for withdrawal. Lenders will no longer be able to reinvest those funds from 1 April 2020. We recommend enabling the auto-withdraw feature of your Harmoney account so all unallocated funds are automatically transferred to your nominated bank account.

Is there any change to lender fees?

No. The rate of lender fees is fixed at the time lenders invest in a loan. A reducing principal balance over time will not result in higher fees.

Risks and returns

Does this increase the risk of any investments I have already made?

There will be no impact on your current investments and no change to Harmoney’s predicted default rates. Harmoney will not change how it assesses borrower creditworthiness as a result of this decision. Harmoney’s collections policy will not change.

Does this mean any change to interest rates or repayments on current loans?

No. Interest rates and the repayment schedules on current loans will remain the same (subject to any earlier repayment, or any extension due to a hardship application).

Will this impact how my returns are paid?

There is no change to our payments or collections policy. We recommend activating the auto-withdraw feature of your Harmoney account so any unallocated funds are automatically transferred to your nominated bank account.

What happens if I invest in new loans before 1 April 2020?

Any loans you choose to invest in between now and 31 March 2020 will be repaid over the three or five year term of the loan (subject to any earlier repayment, or any extension due to a hardship application). There is no change to how these loans will be repaid and managed.

Does this mean Harmoney is no longer an FMA‑licensed peer‑to‑peer lender?

Harmoney will retain its FMA peer-to-peer lending licence for the foreseeable future. Harmoney has notified the FMA of its changes to retail lending from 1 April 2020.