Peer-to-peer lending matches people who want loans with people who are potentially willing to fund those loans. The 'matching' is done via an intermediary - a peer-to-peer lending service.
What is a peer-to-peer lending service
Peer-to-peer lending is a type of financial market service covered by the FMC Act. The Act enables borrowers to raise up to $2million in any 12 month period, without having to issue an investment statement or prospectus (or a product disclosure statement from 1 December 2014). Some peer-to-peer lending services may restrict borrowers to smaller loans than the full $2million. Because borrowers will only get the funds they are seeking if there are people willing to lend it, there are no guarantees they will raise the money they are seeking to.
Why get a licence
With a licence you can provide services to borrowers who want to offer debt securities without supplying a product disclosure statement (PDS). By using your licensed service these borrowers can rely on an exemption in the FMC Act that means they don't need a PDS, although they must still meet all their other legal obligations.
Licensed peer-to-peer service providers have a number of on-going obligations, in addition to the minimum standards and standard conditions set out in their licence. These obligations include notifying the FMA of certain events and providing us with information. Learn moe about your obligations.
All licensed peer-to-peer lending service providers are required to complete and submit a regulatory return annually. The return is a series of questions and licensees will need to submit their return to us by 31 August.
The Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act) 2009 and its Regulations place obligations on New Zealand’s financial institutions to detect and deter money laundering and terrorism financing. Find out how it affects you.
Applicants must pay a fee when they either apply for a new licence for financial market services or apply to vary an existing licence. The relevant fees are set by the Ministry of Business, Innovation and Employment and outlined in the Financial Markets Conduct (Fees) Regulations 2014. Review the full list of fees.