The New Zealand Financial Markets Authority (FMA) has granted its first peer-to-peer (P2P) lending service license to Auckland-based Harmoney under the provisions of the Financial Markets Conduct Act 2013.
The FMA noted that giving P2P license for lending services will facilitate new capital-raising opportunities in New Zealand.
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FMA Compliance Director Elaine Campbell said, "This is a new service for New Zealand that brings new opportunities for lenders and borrowers. Peer-to-peer lending has already proved popular in Europe and US, and we’ve been able to build on that experience."
"FMA’s role is to regulate the companies providing peer-to-peer lending services. The service has great potential but lenders should also realise the risks are greater than putting money in a bank," Campbell added.
In peer-to-peer lending concept, there is a risk of lenders losing money or no interest recovery if borrowers fail to repay the loans.
The market regulator said that the service providers must offer clear disclosure for lenders and have fair, orderly and transparent processes around how they deliver their service. Applicants must also demonstrate they will meet minimum standards of conduct.
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By GlobalDataAs per the rule, borrowers are capped to raising only $2m in any 12-month period through peer-to-peer lending services, applicable to both business and consumer borrowers.
The peer-to-peer lending service must be a member of a dispute resolution scheme, which customers can use at no cost and must also have a complaints handling process.
