The Business Herald’s markets and banking reporter.

Harmoney platform fees questioned by ComCom

Neil Roberts founder of Harmoney. The Commerce Commission wants the court to determine what sort of regulation the fees charged by this peer-to-peer lender should be subject to.
Neil Roberts founder of Harmoney. The Commerce Commission wants the court to determine what sort of regulation the fees charged by this peer-to-peer lender should be subject to.

The Commerce Commission is gearing up to launch civil proceedings related to the fees peer-to-peer lender Harmoney charges borrowers.

Harmoney said the High Court action - on a "case stated" basis - would clarify whether Harmoney's platform fee was subject to the Credit Contracts and Consumer Finance Act.

"The case stated procedure is rarely used and enables the courts to provide a ruling on the interpretation of a particular law," the company said.

Harmoney's joint chief executive, Neil Roberts, said that during the platform's Financial Markets Authority licensing process the company worked with "all stakeholders" and documented its business model in detail following "extensive legal advice".

"As the first peer-to-peer provider to seek and obtain a license, we consulted with the Commerce Commission and MBIE [the Ministry of Business, Innovation and Employment] providing them with full details of our business model including detailed information about fees," Roberts said.

The Commerce Commission questions that claim, however.

"It's not true that they gave us all their company information including fees modelling before their launch," a Commerce Commission spokesman told the Herald.

"They have also never produced their legal advice despite our requests for it."

Harmoney hit back, saying MBIE corrospondence released under the Official Information Act and emails proved the commission was consulted on fees and other aspects of its business prior to the launch.

Harmoney charges a platform fee of $375 to borrowers of all risk grades and loan amounts.

Harmoney chairman David Flack said he was committed to ensuring Harmoney, New Zealand's first licensed peer-to-peer platform, complied with all laws and regulations.

"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 by using Harmoney's operating model as the basis for the judicial review," Flack said.

He said it was "highly problematic" when interpretation of each law by government departments resulted in a lack of clarity around how regulations applied to peer-to-peer platforms.

"For this reason we have also met with the Commerce and Consumer Affairs Minister Paul Goldsmith to request that is issue be clarified by an appropriate legislative change."

In a separate action, the Commerce Commission has filed Fair Trading Act charges in the Auckland District Court alleging Harmoney misled users into believing they had been approved for personal loans.

Harmoney reported a loss of $14.2 million from revenue of $8.6 million in the year to March 31, 2016.

"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," Roberts said.

"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."

- NZ Herald

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