Harmoney’s fixed ‘platform fee’ charged for peer-to-peer lending online is not brokerage but a credit fee, the High Court ruled in an industry test case.
The Credit Contracts and Consumer Finance Act requires credit fees be reasonable. According to its website, Harmoney Ltd currently charges a flat $450 as its platform fee on each loan arranged. Minimum loan limit is one thousand dollars. Prior to December 2015 it charged a 1.25 per cent service fee calculated on repayments of interest and principal.
Harmoney unsuccessfully challenged Commerce Commission complaints that its platform fee was caught by the Act. Harmoney said borrowers committed to payment of platform fees when signing up online to its ‘borrower agreement’. This was independent of any subsequent loan, Harmoney said. Funds are sourced from investors who also register online. Potential borrowers could sign up but never take out a loan.
Justice Courtney ruled the platform fee formed part of Harmoney’s credit contracts. Harmoney itself was a ‘creditor’ in peer-to-peer lending. It is more than a ‘match-maker’, she said. In any event, the platform fee was implied into loan contracts as a fee payable ‘in connection’ with loans, she said. The platform fee is deducted from funds disbursed when a loan is arranged.
Commerce Commission v. Harmoney Ltd – High Court (18.05.18)
18.112