ComCom wants legal clarity

The Commerce Commission has gone to the High Court to ask how the Credit Contract and Consumer Finance Act applies to consumer loans entered into with peer-to-peer lender Harmoney.

Since its incorporation in May 2014, Harmoney has charged borrowers a "platform fee" that is added to all loans funded through its platform. Before December 2015 Harmoney set the fee at a percentage of the amount borrowed.

The commission’s view is that the platform fee is a credit fee under the Act, and that Harmoney is a creditor.

Harmoney says it is not a creditor, and that the fee is the revenue it earns for running its loans marketplace.

If the court finds that the platform fee is a credit fee, the CCCFA requires the fee to be reasonable and only cover the lender’s transaction-specific costs.

The commission said it was asking the court a number of legal questions and it expected the answers would provide more clarity about how consumer credit laws applied to peer-to-peer loans.

It has made its application under section 100A of the Commerce Act which enables it to seek the opinion of the High Court on issues of law.

This is the first time that the commission has made an application under section 100A in a consumer credit case.

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