Peer-to-peer lending service providers

The Financial Markets Conduct Act 2013 (the FMC Act) governs peer-to-peer lending in New Zealand. Under the FMC Act:

• a person is ‘any entity’ (for example, an individual or a company).
• a debt security is a financial product which provides a person with the right to be repaid money (and sometimes interest) from money that has been lent to another person (for example, a loan).

Purpose of a licence

A peer-to-peer lending service is a type of ‘market service’ covered by the FMC Act. There is no requirement for a peer-to-peer lending service to be licensed, however providers may choose to apply for a licence for the following reasons:

• There are less onerous disclosure requirements for borrowers that offer debt securities through a licensed peer-to-peer lending service. In particular, a debt security can be offered without having to supply a product disclosure statement (PDS).
  • learn more about a PDS 
  • learn about disclosure requirements for a PDS.
• Borrowers and lenders may be more willing to use a peer-to-peer lending service that has met licensing requirements of the FMC Act, the regulations and the FMA.

Eligibility for a licence

To be eligible for a peer-to-peer lending service licence, applicants must be able to demonstrate to the FMA that they meet certain licensing requirements, including criteria that:

• the applicant’s current and proposed directors, senior managers are fit and proper to hold their respective positions;
• the applicant is capable of effectively performing the service;
• the service is fair, orderly and transparent;
• the service is designed primarily for borrowers other than the provider;
• the service adequately checks the identity of borrowers, assesses the risk of lenders not being repaid, and discloses those checks and assessments to lenders;
• the service will ensure that each borrower does not raise more than $2 million in any 12-month period;
• the service has adequate fair dealing and conflicts of interest policies;
• the provider is a registered member of a dispute resolution scheme.
• there is no reason for the FMA to believe that applicant will contravene licensee obligations.

Applying for a licence

Before you apply

To assist with the licensing process, we suggest that you do the following:

1. Set up your business to provide a financial service to persons in New Zealand, this will include:
   • Setting up a RealMe® account;
   • Registration on the New Zealand Financial Service Provider Register.
2. Review our peer-to-peer lending service licensing guides:
   • Licensing Guide Part A provides an overview of the licensing process. 

Download the licensing guide Part A: How do I apply for a licence? PDF.

• • Licensing Guide Part B provides guidance on the questions we will ask, the ‘minimum standards’ you’ll need to meet, and the information and documents you’ll need to provide to us when you submit your application. 

Download Part B: Peer-to-peer licence guide PDF.

How to apply

Please contact us to get a copy of a licence application by emailing [email protected].

Licensing declarations and certificates

For applicants

SD1.0  Certificate of compliance and authority to apply (applicant or their authorised person)

SD1.1  Declaration by current/proposed director of licence applicant

SD1.2  Declaration by current/proposed senior manager of licence applicant

SD1.3  Curriculum vitae of management team member of licence applicant

SD1.4  Declaration  by Independent trustee (individual) -  a combined certificate and declaration

For related bodies of the applicant

SD2.1  Declaration by executive director of related body to licence applicant

SD2.2  Declaration by senior manager of related body to licence applicant

For relevant parties to the applicant

SD3.1  Declaration by director of relevant party to licence applicant

SD3.2  Declaration by senior manager of relevant party to licence applicant

SD3.3  Declaration by individual relevant party to licence applicant (such as owner)

How to cancel an FMCA Licence

Guidance on how to cancel an FMCA licence

The basic licensing fee payable to apply for a peer-to-peer lending service licence is $6,238.75 (incl. GST). 

We may charge an additional fee where the time to assess a licence application exceeds 40 hours, as set by the Financial Markets Conduct (Fees) Regulations 2014. For an FMA staff member this is set at $178.25 per hour, or part-hour pro rata, of work carried out.  Please refer to the regulations for further information.

If an additional fee will be incurred for your application, we will notify you in advance, including the reason why. 

Applications to vary conditions on an existing licence will incur an application fee of $115 plus $178.25 per hour, or part-hour pro rata, of work carried out.

Please refer to the Financial Markets Conduct (Fees) Regulations 2014 for more information. 

All amounts are GST inclusive. 

This payment is to apply for a peer-to-peer lending service licence; it does not include any annual levies, or fees to register on the Financial Service Providers Register.

Levies

The Financial Markets Authority (Levies) Regulations 2012 (the Regulations), as amended in 2020, set out the levies payable by industry. The levies are set by the Ministry of Business, Innovation, and Employment (MBIE).

The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.

Levy Classes

A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.

• A levy must be paid for every levy class the financial markets participant falls within. Levies are payable on the relevant leviable event as described in column 3 of Schedule 2 in the Regulations.
• Some levy classes have been split in order to recognise the variations in size and nature of different financial market participants.
• Most levies are paid when making an annual confirmation to the Registrar of Financial Service Providers (the Registrar).
• Most levies are payable to the Registrar, via the (FSPR). However, some levies are payable directly to the FMA. This is set out in column 4 of Schedule 2 in the Regulations.
• The following levy classes are invoiced directly by the FMA:
• Levy Class 8, Levy Class 8A, Levy Class 10, Levy Class 10A and Levy Class 13.

Levy waivers

We have discretionary power to waive a levy (in whole or part). We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.

The waiver power is not intended to be used to revisit settled policy positions.

Once we receive a waiver application and the fee, we will assess it.  If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.

How to apply for a levy to be waived

You will need to email the following information to [email protected] with the subject line ‘Levy waiver application’.

• Name of person or entity applying for the waiver.
• Contact person for correspondence concerning the application including address, phone number and email.
• Indicate the persons/entity who will receive the benefit of any waiver granted.
• Specify which class(es) you seek a waiver from and whether a waiver is sought from the full levy or part and the amount thereof.
• Let us know your preferred date for any waiver to take effect.
• Explain why the waiver should be granted and why your circumstances are exceptional when compared with others in the same class.
• Provide all relevant facts in support of your application.
• Explain any regulatory benefit of FMA granting the waiver.
• Give details of any previous contact with officials (including their names) at FMA or MBIE (including the Companies Office) on the matter.

How to pay your waiver application fee

You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.

The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.

We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.

* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.

What are the fees

• A payment of $1,265 should accompany each application.
• This covers the application fee of $115 set out in the Financial Markets Authority (Fees) Regulations 2011 and an advance of $1,150 (including GST) for fees and costs to be incurred.
• These regulations set out charging rates of $230 (including GST) per hour for time spent by FMA Board members and $178.25 (including GST) per hour for time spent by FMA staff.
• These regulations are set by MBIE.

How long does it take

• Once we have been provided with all relevant information, it generally takes around six weeks to process an application.
• This may be longer if any policy questions arise.
• If your application is urgent, please provide the date you need the decision by.
• You must also provide reasons for requesting urgent consideration.

Offences

It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.

Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:

• provide services you are not registered for or state you are registered for a particular financial service when you are not
• make a representation relating to any document or information required by the FSP Act or its regulations knowing that it is false or misleading, or omit any matter knowing such omission is false or misleading.

These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.

It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.

Standard conditions

The FMA has published guidance on the standard conditions that are generally imposed on a peer-to-peer lending service licence by the FMC Act, the regulations, and the FMA. 

Download the Standard conditions for peer-to-peer lenders PDF.

The FMA may also impose specific (or non-standard) conditions on a peer-to-peer lending service licence on a case-by-case basis. The FMA will notify you of these conditions when the licence is granted.

Notifying the FMA

All notifications should be emailed to the FMA (unless we state that the relevant notification form is available on our Online Services portal) at [email protected] noting the relevant obligation in the subject line of your email.

Regulatory returns

Peer-to-peer lending service licensees are required to submit an annual regulatory return to the FMA. Regulatory returns provide us with up-to-date information to help us to understand the businesses that we regulate and to determine the focus and priority of our monitoring activities.

Submit your regulatory returns online at FMA Online Services portal

To complete the return, you will need to log into Real Me. After logging in you should select “Complete a regulatory return” and enter the FSPR number of the entity the return is being completed for. Please follow the instructions included in the form to complete the return, you may save and come back to the form at any time.

If you have any questions on completing the new form, please contact the FMA on [email protected].  

Other licensee obligations

In addition to the obligations imposed by licence conditions, licensees are also required to comply with other obligations on an ongoing basis. These obligations will depend on the nature of the services provided by a licensee and any applicable legislation. The following obligations apply to licensed peer-to-peer lending services:

Financial reporting obligations

All FMC reporting entities must comply with the following:

• Keep proper accounting records to assist with the preparation of compliant financial statements. Records must be kept in English and a copy must be kept in New Zealand.  
• Prepare financial statements for the group's operation.  Financial statements must comply with generally accepted accounting practices in New Zealand.
• Ensure that financial statements are audited by a licensed auditor or registered audit firm. 
• Lodge financial statements and the auditor’s report with the Companies Office within 4 months of the balance date

AML/CFT obligations

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) imposes several obligations: 

• You must provide a written risk assessment of the money laundering and financing of terrorism activity you could expect in the course of running your business.
• You are required to implement an anti-money laundering and countering financing of terrorism programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism.
• You are required to appoint a compliance officer to administer and maintain your programme.
• You are required to perform due diligence processes on your customers. This includes customer identification and verification of identity.
• You are required to report suspicious transactions. 

Client money and client property services obligations

A client money or client property service provider is a financial services provider who holds, transfers or makes payments with client money or property, this includes custodial services. Under the FMC Act, providers must comply with disclosure and conduct obligations. These obligations apply whether services are provided to retail or wholesale clients. 

View Client money or property services provider obligations.

Financial advice obligations

If you provide financial advice to retail clients as part of your service, you must either hold a Financial Advice Provider (FAP) licence or be engaged to operate under a FAP licence, and you will need to fulfil a number of duties. These duties aim to ensure New Zealanders have access to quality financial advice and it helps to build public confidence in advisers. 

Download the Meeting your obligations factsheet PDF.

The FMA has wide powers to exempt persons or transactions from some financial markets law requirements. These powers enable us to remove rigidities in the law and ensure requirements for businesses are reasonable and cost-effective. Find out more about exemptions you can apply for under the FMC Act and current exemption notices.

The aim of this guidance is to ensure licensed crowdfunding and peer-to-peer lending platforms understand their obligations when advertising or communicating with customers. View Fair dealing in advertising guidance.

This guidance contains information to help peer-to-peer lending service licensees understand and meet minimum licensing standards in relation to publishing default rate information. It sets out what ‘default’ means, when licensees must comply with the standard, and guidelines on how to publish fair, clear and transparent information. View the publishing default rate information sheet.

This information sheet explains the FMA’s expectations for a compliance assurance programme (CAP). It will be useful for entities holding or applying for a licence under the FMC Act. View the CAP guidance.

It gives guidance on what we will focus on when examining how licensed financial services providers demonstrate good conduct, and how they meet their governance and management responsibilities. View the Guide