The Commerce Commission is going to court to ask for clarity on how it applies the Credit Contract and Consumer Finance Act on loans issued through peer-to-peer lender Harmoney.
Harmoney’s fees were questioned because they were originally set as a percentage of the amount borrowed. The CCCFA requires that fees are proportionate to the cost to the lender of administering the loan.
“A country of our size and location must be a more nimble regulator than other countries, especially in a time of rapid technological change. It was disappointing to see the Minister of Commerce, under questioning in the House, had no answers other than that he’s ‘considering the options’, especially considering the sector brought this to his attention four months ago,” Seymour said.
“Badly-drafted red tape and an overzealous regulator is threatening the growth of peer-to-peer lending. MBIE is advising the Minister to apply fee restrictions to these companies as if they are traditional lenders, despite the fact that they are not actually lenders, but intermediaries connecting personal lenders with borrowers. This stands in stark contrast with the UK, US, and Australia, where peer-to-peer lenders are using models that the Commerce Commission objects to, where platforms can charge fees to borrowers as well as lenders.”
He said it would be foolish of the Government to scare off peer-to-peer platforms when the international industry was growing quickly.
“The Commerce Commission has spent millions trying to interpret the CCCFA, while peer-to-peer platforms tear their hair out dealing with the uncertainty and (in the case of Harmoney) court costs. Rather than waiting for a costly and elongated test case, the Minister should amend the law and bring us in line with overseas jurisdictions.”