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10-03-2019, 03:11 PM
#4161
Originally Posted by Joshwnz
What are the risks to existing investors in the case where Harmoney loses its license? Would Harmony close up shop? What are implications to existing loans outstanding and their lenders?
I should expect no change to existing loans, but no new business for any clients under P2P framework - which doesn't seem too much of a loss from where we have arrived now with capital sitting idle and less than 10 loans a day for retail peers - which come 65% auto lent and are gone in a flash - or two!
Harmoney (or its agent) would still be up and running until all outstanding loans have defaulted/been fully paid off. There must be something about this under lender risks.
Last edited by beacon; 10-03-2019 at 03:15 PM.
Reason: Added: agent as alternative
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10-03-2019, 04:14 PM
#4162
Member
Originally Posted by beacon
Should FMA renew Harmoney's P2P license for a further 5 years or longer term?
While returns to date from Harmoney have been comparatively good for all investors - big and small, Harmoney is showing a growing propensity to sideline the core peers so it can play with the big fish. Retail investors have recently become increasingly forced to withdraw their invested capital, as it has been repaid and has sat idle for months while wholesalers were being filled. In a P2P theatre, why is institutional money being prioritized over retail? While Harmoney's loan securitization may be good for NZ Debt sector, how is it good for the kids if their pocket money has to be choked off so Mama Harmoney can send a packet over to affluent Uncle Benz?
If Harmoney wants to behave like a Non Banking Financial Institution, ignoring its loan volume and loan quality obligations to its core peers while paying lip service to them, perhaps it is time it operated and fulfilled its obligations under a more appropriate license. If I were FMA, I would NOT renew Harmoney's P2P license UNLESS it committed to:
1. Directing at least 51% of its loan volume to retail peers, keeping within the spirit of its license
2. Maintaining at least loan quality equanimity between its retail and institutional investors
I would also certainly NOT renew Harmoney's P2P licenses for terms any longer than annually for the time being, until I was satisfied that Harmoney had learnt to respect its P2P license terms.
Well written and a very adroit point. And with the current trickle of loans in which 20+ retail loans are being paid back daily and only 6-10 offered simply is not on.
But to play devils advocate and out of curiousity (as don't know), what compliance/barriers/costs are there preventing switching to a framework similar to Moola/Gem/Finance Direct and leaving P2P in runoff??
ie HM rhetoric indicates it is still committed to P2P, but its actions suggest otherwise. Which suggest to me it would be costly to transition away from P2P, so does the minimum required to keep its license.
Last edited by leesal; 10-03-2019 at 04:29 PM.
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10-03-2019, 05:30 PM
#4163
Member
I would hate for Harmoney to lose its license but it does increasing seem that it's P2P status is merely a flag of convenience.
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10-03-2019, 06:13 PM
#4164
yeah, nah
The issue comes down to the definition of what Peer-to-Peer is. Unfortunately the FMA use words like 'people' when referring to a peer??? I think it all comes back to ComCom not putting in any/enough effort when P2P first started in NZ.
As far as FMA is concerned Harmoney are playing fair and are very transparent in what they are doing - they clearly state that they can and will adjust the Institution:Retail ratio.
The only possible issue is in their advertising - however I don't think they say things like "kiwi's borrowing from kiwi's" anymore (I think they did in early days.), so that's probably not something that can be actioned either.
It is what it is I'm afraid...
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11-03-2019, 08:17 AM
#4165
Member
Originally Posted by myles
As far as FMA is concerned Harmoney are playing fair
. Myles, can you direct me to the FMA's latest report on Harmoney, please?
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11-03-2019, 09:09 AM
#4166
yeah, nah
Originally Posted by BJ1
. Myles, can you direct me to the FMA's latest report on Harmoney, please?
What report? There has been no complaint/investigation against Harmoney that I'm aware of i.e. no issue? The latest P2P industry data is here: P2P Snapshot, if that's what you mean?
Even the FMA highlight the availability of loans as a 'risk': FMA Advice
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11-03-2019, 09:31 AM
#4167
Member
So why did you assert that the FMA consider that Harmoney is playing fair?
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11-03-2019, 09:49 AM
#4168
yeah, nah
Originally Posted by BJ1
So why did you assert that the FMA consider that Harmoney is playing fair?
Because they (Harmoney) haven't done anything that they haven't been transparent about or that is unfair?
What exactly do you think Harmoney have done that needs the attention of the FMA?
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11-03-2019, 09:55 AM
#4169
Member
My point is that you draw a long bow to conclude that the FMA consider Harmoney to be squeaky clean, when there is no evidence to even indicate that the FMA have looked beyond annual reporting by Harmony itself. As to what Harmoney might be doing "wrong" perhaps a closer look at how there are minimal collections on written off loans where the borrowers owned houses, might be a start.
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11-03-2019, 10:16 AM
#4170
yeah, nah
Originally Posted by BJ1
My point is that you draw a long bow to conclude that the FMA consider Harmoney to be squeaky clean, when there is no evidence to even indicate that the FMA have looked beyond annual reporting by Harmony itself. As to what Harmoney might be doing "wrong" perhaps a closer look at how there are minimal collections on written off loans where the borrowers owned houses, might be a start.
In the context of the conversation regarding allocation of loans, what have Harmoney done that is unfair?
If you believe Harmoney aren't operating within the License that the FMA administer then take it up with them. I personally don't like the poor recovery of defaults ($131.15 from $5,895.03 for my portfolio), but see it as being within the industry wide norm - price of being in the lending game... Harmoney are upfront (transparent) with default rates etc., so again, I don't see anything that is actionable.
Added: Looking at the recovery value the way I have, is probably very unfair to Harmoney - the $131.15 is recovery from loans over 180 days old, I have no doubt that a significant amount is chased/recovered prior to a default getting to this stage.
Last edited by myles; 11-03-2019 at 10:27 AM.
Reason: Added:
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