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Harmoney changes fee structures

Harmoney is now charging a flat upfront fee of $375 to borrowers, replacing a percentage model that was being investigated by the Commerce Commission.

Friday, December 4th 2015, 6:00AM

by Susan Edmunds

It had been looking at Harmoney’s fees and how they fit within the Credit Contracts and Consumer Finance Act.

Under the act, lenders must only charge administration fees that directly relate to the cost of processing the loan.

But Harmoney and LendMe both charged percentage-based fees, which grow in size as borrowers' risk ratings decline.

Harmoney was charging 2% to 6% and LendMe 1% to 7%.

In many cases, that can range into thousands of dollars. LendMe deals with borrowing up to $2 million.

Squirrel charges set fees of $250 for an unsecured loan and $500 for a secured loan.

Harmoney had argued that its fees are not caught by the CCCFA because it is an intermediary, facilitating loans but not lending itself.

John Bolton, of Squirrel Money, said he did not buy the argument they were outside the Act.

He said whatever the Commerce Commission decided, something would probably have to change.

“There are two possible outcomes – either they will come to the opinion that Harmoney and LendMe are potentially in breach of the CCCFA and they will have to change their fee structures, or they will decide P2P and platform fees in particular fall outside of CCCFA.  The legislation is not well written and never foresaw this product.  While percentage based fees might end up within the law, I don’t believe it’s within the intention of the law and lawmakers will then need to change the legislation.  Long-term I don’t think there’s an easy way out for platforms charging percentage fees.  Either they will lose in the eye of the law, or the rules change to not allow performance-based fees.”

He said the same rules governing fees should apply to all lenders.  “It’s really important that the Commerce Commission makes a fast decision because the longer they leave it, the bigger the mess with more lenders coming into the market all the time.”

Marcus Morrison, of LendMe, said he believed his organisation was structured so it would be in line with what the Commerce Commission was looking for.  “[The fee] is paid by the borrower as a platform fee, it’s nothing to do with the credit transaction as such. It’s a fee from the borrower when a loan is [issued].”

Tags: Peer to Peer Lending Squirrel

« Brokers refer tricky clients to LendMeBolton: How do investors know P2P right for them? »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 ▼6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 ▼6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.79 - -
Co-operative Bank - Owner Occ 8.40 ▼6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 ▼7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - ▼6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 ▼7.74 7.29 6.59
SBS Bank Special - ▼7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 ▼6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

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