The Financial Markets Authority (FMA) has issued its first
licence for a new peer-to-peer lending service, but outlined
a heightened risk profile for lenders seeking higher returns.
Up to $2 million has been set for the borrower ceiling, while
regulations covering crowdfunding, to a similar level, are
still being worked on.
The Financial Markets Authority has licensed Auckland-based
Harmoney as the first intermediary, between lender and
borrower, under the provisions of the Financial Markets
Conduct Act 2013.
The FMA's director of compliance, Elaine Campbell, said the
peer-to-peer licensing was part of FMA's brief to promote new
capital-raising opportunities in New Zealand; also part of
the Government's business growth agenda.
''The service has great potential but lenders should also
realise the risks are greater than putting money in a bank.
''Lenders can lose money or not get the interest they expect
if borrowers fail to repay the loans,'' Ms Campbell said.
She said under the regulations, borrowers were limited to
raising no more than $2 million in any 12-month period
through peer-to-peer lending services.
''This limit applies to both business and consumer borrowers,
although individual service providers may impose lower limits
on the amount that may be borrowed,'' she said.
The regulations do not impose any limits on the amount
lenders can lend, although some service providers may impose
''Lenders should remember they may not be able to withdraw
their money at short notice,'' Ms Campbell said.
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 FMA was still reviewing four other potential licences,
including three equity crowdfunding applications and one for
both peer-to-peer and crowdfunding platforms, BusinessDesk
''We do expect we will be in a position to be licensing an
equity crowdfunding platform quite shortly, we're just
working through some final issues with the applicant,'' she
Those still waiting to hear from the regulator on their
equity crowdfunding applications include Wellington-based
PledgeMe, the crowdfunder looking to expand into equity
offerings, Armillary Private Capital, which has partnered
with the UK-based Crowdcube, and Auckland-based Snowball
Lendit, which counts entrepreneur Selwyn Pellet as an
investor, has applied for both licences.