Comcom examines LendMe fees
Peer-to-peer lender LendMe has been contacted by the Commerce Commission, with questions over the fee it charges its borrowers.
Monday, December 14th 2015, 5:59AM
by Susan Edmunds
There are three peer-to-peer lenders operating in New Zealand: LendMe, Harmoney and Squirrel Money.
For its first year in operation, Harmoney charged borrowers a fee calculated as a percentage of their loan.
When LendMe entered the market, it adopted a similar structure.
Harmoney was charging 2% to 6% and LendMe 1% to 7%.
But two weeks ago, Harmoney changed its fee to a flat $375.
General manager Monica Mathis said: “As a new technology company that is operating successfully in a burgeoning online marketplace, Harmoney is constantly evolving and finding ways to disrupt traditional lending. As part of a commercial review of our operations, we have therefore decreased the platform fee charged to borrowers, and a fixed fee now applies to all loans.”
But the Commerce Commission had been investigating the percentage-based fees.
Under the Credit Contracts and Consumer Finance Act fees charged must relate to the cost of the business of administering the loan. Harmoney had argued that its fees are not caught by the CCCFA because it is an intermediary, facilitating loans but not lending itself.
LendMe is now the only one still charging a percentage-based fee to borrowers. Its fees could be much higher because it will deal with lending to $2 million.
A spokeswoman for the Commerce Commission confirmed it had expanded its inquiries to include the new market entrant.
"We are considering how the Credit Contracts and Consumer Finance Act (CCCFA) applies to fees charged by peer-to-peer lenders, including LendMe. We have been in touch with LendMe about the fee they charge borrowers who get loans through their platform. The Commission will consider this as part of our overall enquiry and we expect to give a further update early next year," she said.
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