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LendMe rejects fee criticism

Peer-to-peer lender LendMe has hit back at suggestions the fees it charges may be in breach of the Credit Contracts and Consumer Finance Act.

Thursday, December 17th 2015, 1:58PM

It has been revealed that the Commerce Commission is looking into its fee structure as part of a wider investigation of peer-to-peer fees.

It and Harmoney were both charging borrowers a percentage-based fee but Harmoney has since backed down.

Under the CCCFA, lenders must only charge a fee that is proportionate to the cost to the business of writing the loan.

LendMe chief executive Marcus Morrison said the fees were fair and reasonable, and were determined by the level of risk involved.

He said LendMe shared Harmoney’s view that its fees did not fall under the CCCFA because it was a platform administering loans, not a lender itself.

He said: “The CCCFA says fees charged by lenders must relate to the cost of the business of administering the loan. However, because LendMe does not lend the loans itself, the CCCFA rules do not apply.

“LendMe is an intermediary, as set out in regulations governing its P2P licence.  LendMe’s fees are not credit fees under the CCCFA, but LendMe does nevertheless adhere to general standards of reasonable commercial practice.  LendMe is currently assisting the Commerce Commission in reviewing our business model in light of the CCCFA.”

Borrowers can apply for loans between $25,000 and $2 million, and lenders may fund loans in full or in increments of $1000.

LendMe’s key point of difference compared to other peer to peer lenders is that all loans are secured against borrowers’ assets, most commonly first mortgages over property.

Borrowers pay a platform fee to list their loan online with LendMe, and have to pay the fee once their loan has been fully funded. 

Dependent on their assessed risk score, the fee for using the platform is between 1% and 7% and is charged by LendMe to the borrower. The better a borrower’s credit assessment and loan-to-value ratio with the security, the lower the fee. There are no penalty fees for paying the loan back early.

For investors, a loan management fee of between 0.9% to 1.95% of their lending will apply for managing the loan on their behalf.

“LendMe’s fees to borrowers represent excellent value for the services provided and will continue to be charged by reference to the loan’s risk grade. So, for those loans that are considered the lowest risk (assessed through a matrix considering LVR, debt servicing and credit history) there is currently a 1% fee and for the highest risk loans it could be up to 7% of the loan amount. This is the fairest way to charge the fee because it best reflects the skill and effort applied by LendMe in assessing and then publishing the loan on the platform,” Morrison said.

Tags: LendMe

« Rewrites upset investorsHarmoney increases borrowers' interest rates »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - ▲4.75 - -
Co-operative Bank - Owner Occ 5.85 ▲4.85 ▲5.35 ▲5.65
Co-operative Bank - Standard 5.85 ▲5.35 ▲5.85 ▲6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 5.85 6.19 6.39
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 4.85 5.19 5.39
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank 5.59 5.14 5.79 6.15
TSB Special 4.79 4.34 4.99 5.35
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.00 5.69 5.99

Last updated: 23 June 2022 9:02am

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