The Financial Markets Authority (FMA) today issued its first licence for a peer to peer (P2P) lending service to Auckland based Harmoney, meaning that P2P will soon be available to those in New Zealand.
Elaine Campbell, FMA’s Director of Compliance stated that “this is a new service for New Zealand that brings new opportunities for lenders and borrowers. Peer-to-peer lending has already proved popular in Europe and US, and we’ve been able to build on that experience,” as reported in Finextra.
P2P has gone from strength to strength in the last five years, with the US and UK markets taking a lead. The aim of P2P is to take out the middle man, i.e the bank, with an online platform directly matching borrowers with lenders and acting as a ‘marketplace’ for lending. The P2P industry covers a wide spectrum of borrowing needs, from buying a house to paying an invoice and in New Zealand it would appear that Harmoney aims to cover a variety of these goals, listing ‘home improvement, holidays, travel and motor vehicles’ as some reasons to borrow from the platform. However it also states that you can borrow for “whatever – you know what you want, that’s good enough for us”. It is encouraging to see an online platform in New Zealand that has a large scope for borrowers and lenders, giving a good boost to a burgeoning market.
It is always worth questioning however the capacity of these platforms, what security and back up plan is in place should it all go wrong. I’m not just talking about Harmoney but rather the P2P industry on a larger scale, it is well worth asking the questions of how secure is a platform and can I get my money when I need it? P2P is a great tool and I am all for it, but with an emerging industry in New Zealand I just hope that those borrowing from the platform are top class so that lenders will not be scared of by bad debt so early in the life cycle of this industry.
P2P has taken off in leaps and bounds here in the UK and I am sure that New Zealand, with its first licensed P2P platform will be no different. If you want to hear more about the UK P2P market and the role that institutional investors can play, join us for the Peer to Peer Lending and Investment Briefing on 15th October in London to hear from industry experts such as, Christian Faes from LendInvest and Peter Behrens from RateSetter.