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Harmoney gets first peer-to-peer lending licence

The Financial Markets Authority has awarded its first peer-to-peer lending licence to Harmoney, and expects to license an equity crowd funding platform "shortly".

Auckland-based Harmoney is the first platform operator to receive a licence under the new Financial Markets Conduct Act, which came into effect on April 1, providing a regime to match lenders with borrowers, with a $2 million cap on the amount allowed to be borrowed. The new legislation also allows for equity crowd funding, with the possibility to raise up to $2 million on the crowd sourcing platforms. The FMA is still reviewing four other potential licences, including three equity crowd funding applications and one for both peer-to-peer and crowd funding platforms.

"We do expect we will be in a position to be licensing an equity crowd funding platform quite shortly, we're just working through some final issues with the applicant," Elaine Campbell, FMA director of compliance told BusinessDesk. "To an extent the applicant is driving the timetable in that regard."

Those still waiting to hear from the regulator on their equity crowd funding applications include Wellington-based PledgeMe, the crowd funder looking to expand into equity offerings, Armillary Private Capital, which has partnered with the UK-based Crowdcube, and Auckland-based Snowball Effect. Lendit, which counts entrepreneur Selwyn Pellet as an investor, has applied for both licences.

Harmoney, which operates an online platform, will match individual borrowers, rather than businesses looking for capital, with lenders, and determine the interest rate on the loan based on the credit risk of the borrower. The platform is yet to set an official launch date.

"We couldn't be more excited to lead the charge and shake up New Zealand's personal lending market with a new competitive and technologically advanced investment and lending platform," Harmoney chief executive Neil Roberts said in a statement.

The licensing is part of the regulator's expanded brief to bolster New Zealand's capital markets but the new platforms do carry risks for lenders. Much of the licensing process has been ensuring platforms in both equity crowd funding and peer-to-peer lending inform investors of the risks and the regulator will continue to monitor businesses' compliance with their licences.

The FMA's Campbell said lenders need to understand the risk associated with their investment.

"The peer-to-peer platform must have a debt collection process in place and one of the other criteria is that the platform has got to disclose the default rates of the loans they're making," Campbell said. "So it is important that people who are wanting to lend money do pay attention to that disclosure and understand what checking the platform has done of the borrowers."

The licensing process requires businesses build the platform to fit the regulations, but is not prescriptive on how the platform might operate. Campbell said the process was new, and the regulator had sought to be facilitative throughout.

"Given that these businesses are new, clearly they haven't been able to operate in New Zealand before in the equity space, we are dealing with primarily start-up companies," Campbell said. "The process was clearly new for them and to that extent perhaps understanding the expectations of the regulator had been a dialogue that we've engaged in with them but we have been available for all of the applicants."


Comments and questions

I have followed the progression of Peer-to-peer with Society One in AU, and of course in the more mature markets in the US etc. So good to see that this financial flexibility has reached these shores.

However upon visiting Harmoney, and as both a potential for being an investor or borrower, the website falls flat somewhat in providing a sense of trust. - imperative as a market pioneer. While the information available for investors has me "handing money hand over fist" ... as a potential borrower.. the information s lack lustre, no mention on what to expect on borrowing costs, approval process etc.. instead, I am encouraged to provide all of my personal (not financial) details in a form to get pre-approval.. but pre-approval to what?

And of course.. there is no way to "contact" the good folk at Harmoney, via email or other.

So.. while peer-to-peer is indeed a great alternative to banks.... banks have the inherent trust of consumers. I would encourage Harmoney to work on this education - one of the curses of being first to market.

Hi Advocate,

I'm sorry that you found some aspects of our website to be lack lustre, but your feedback is both noted and appreciated! I can assure you that we're working very hard to make sure that our full website, which will go live in the coming weeks, will provide the aspects that you have found lacking.

If you have any further questions please don't hesitate to contact me at

Grace - Community Manager at Harmoney