Media Releases

Commission asks the Court to clarify how credit law applies to Harmoney

29 August 2016

The Commerce Commission has filed civil proceedings in the Auckland High Court asking the Court questions about how the Credit Contract and Consumer Finance Act 2003 (CCCFA) applies to consumer loans entered into with peer-to-peer lender Harmoney Limited.

Since its incorporation in May 2014, Harmoney has charged borrowers a ‘platform fee’ that is added to all loans funded through its platform. Before December 2015 Harmoney set the fee at a percentage of the amount borrowed. The Commission’s view is that the platform fee is a credit fee under the Act, and that Harmoney is a creditor. Harmoney says it is not a creditor, and that the fee is the revenue it earns for running its loans marketplace.

If the Court finds that the platform fee is a credit fee, the CCCFA requires the fee to be reasonable and only cover the lender’s transaction-specific costs, as recently confirmed in the Supreme Court’s MTF/Sportzone ruling.

The Commission is asking the Court a number of legal questions and it expects that the answers will provide more clarity about how consumer credit laws apply to loans offered by Harmoney and other peer-to-peer lenders.

A copy of the application to the Court setting out the Commission’s questions is available in the consumer credit section.

The Commission has made its application under section 100A of the Commerce Act which enables it to seek the opinion of the High Court on issues of law. This is the first time that the Commission has made an application under section 100A in a consumer credit case.