Harmoney

[beacon]

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???

Heartland Bank or BNZ are not our peers, by any stretch of imagination.

I don't think they say things like "kiwi's borrowing from kiwi's" anymore (I think they did in early days.)...

Harmoney may have drifted away to their "insto" peers now (at the expense of their "retail" peers), but the general understanding of their clientele - of what a Jo Public borrower's "Peer" is, and what Harmoney meant by "Peer" when they created their initial ads, hasn't drifted with them too. I quote a quip by Warren again:

Abraham Lincoln once posed the question: “If you call a dog’s tail a leg, how many legs does it have?”
And then answered his own query: “Four, because calling a tail a leg doesn’t make it one.”

[myles]

Integrity aside (please don't read that as me dismissing it), the FMA have given Hamoney a P2P Lending license, at the time, they would have investigated/tested the Harmoney lending model, which has always included the wholesale/retail split and the ability to change it. It would be a difficult task to backtrack on that I would imagine.

Included in that license is the requirement for financial reporting and audits to the FMA (even though some here suggest that this doesn't happen).

Whether I agree or not with the changes Harmoney are making to their business model, I personally can't see that they are acting unfairly or in a non-transparent way. There is no requirement for me to like the changes...I don't of course.

However, I think Harmoney may have lost sight of why P2P is popular - "kiwi's lending to kiwi's"/"kiwi's borrowing from kiwi's". Perhaps Harmoney 'know' that borrowers don't care where the money comes from and that borrowers are only interested in getting the best/easiest loan that they can. To me, this is a very fickle business model, a few social media outcries, or the like, could see borrowers walk away in droves. Where would that business model be then?

[Bjauck]

Integrity aside (please don't read that as me dismissing it), the FMA have given Hamoney a P2P Lending license, at the time, they would have investigated/tested the Harmoney lending model, which has always included the wholesale/retail split and the ability to change it. It would be a difficult task to backtrack on that I would imagine...

I understand that you are not dismissing integrity. We have to deal with what regulations permit and what the FMA accept.

If the FMA accepts the wholesale/retail split and the ability for a P2P to reserve certain loans for certain “classes” of lender peers, then this should be clearly stated by them. On their website in the P2P section of advice for investors, there is no mention of such ability to discriminate. As such discrimination between lender peers is becoming such a material factor in retail lender peers being able to invest their money into loan notes, then at the very least, FMA should mention it on their website.

https://www.fma.govt.nz/investors/wa.../peer-to-peer/
“Lenders may be able to lend the full loan requested, or just a portion of it. The provider may also group up similar loan requests so the lender has the opportunity to invest in a variety of loans at one time”

”3. If you want to re-invest you may have to waitAt a bank you can often roll over your term deposit as soon as it falls due, but with peer-to-peer lending you may need to wait until there are peers who want to borrow it. You may miss out on some interest while you're waiting”

[myles]

Discrimination between peers (of any sort) is a very good point!

[BJ1]

When one lends to a bank one can check that bank's financial health and performance via public records. The same applies with company borrowers and share investments, so the major risks in investing in such entities are calculable from, albeit historical, public records. With Harmony it seems most investors consider that borrower default risk is the major factor, and that may be so. However, Harmony acts on investors behalves to assess loan risk accurately and to manage default risk and debt collection. I have never seen anything to indicate what sort of job Harmoney performs in this part of managing risk on our behalf. Audits generally are limited to financial management so that the readers of audits can see there has been no hanky panky with their money but generally audits do not tell readers if processes meet expectations - and there is nothing I have seen which indicates that the FMA have bothered to put in place such a reporting regime. That recoveries on written off loans, particularly loans where the borrowers own their own home, are as negligible as they are indicates lenders on the Harmoney P2P platform should not be satisfied.

[Cool Bear]

For the many here who feel strongly about the issue, why not take it up with HM itself or even better, write to the FMA.

ps. I did contact FMA on what is a reasonable split a few months ago but did not get a reply and did not follow up - perhaps more voices will be useful? Like some here (Myles included), while I want HM to be fair to us retail, I also want them to succeed as a business. Thus, I am not kicking up a fuss (yet!) up with them or FMA.

[Cool Bear]

Anyone here notice that the recoveries figures have a little jump today? Mine usually goes up a few cents or a few dollars on a good day. Today it went up $96! HM must have sold some of the bad debts today (or accounted for the sale today).

[Wsp]

I suspect harmoney allocates more to institutions because harmony receive more fees from those loans. Hence why the wholesale RAR is lowest. Would retail investors accept a greater share of the loans in exchange for higher fees?

[Wsp]

Anyone here notice that the recoveries figures have a little jump today? Mine usually goes up a few cents or a few dollars on a good day. Today it went up $96! HM must have sold some of the bad debts today (or accounted for the sale today).

No jump for me. My recoveries are currently sitting at 1.25% of charged off principal.

How is everyone else looking?

[beacon]

I suspect harmoney allocates more to institutions because harmony receive more fees from those loans. Hence why the wholesale RAR is lowest. Would retail investors accept a greater share of the loans in exchange for higher fees?

Indeed ( re the first observation) . I would be happy to pay the wholesale fees Wsp, as I wouldn't also need to spend a minute choosing, reading, buying, waiting for any loans. I would also be happy just to have an autolend on with filters, but its been firing blanks in the current allocation regime. I don't think Harmoney is likely to change that, and I don't want to put more idle cash in - as it lowers the overall RoE.

My recoveries also jumped yesterday Cool Bear, but the small numbers render the percentage rise meaningless. Recoveries-to-date are less than 0.25% of default value, so I think BJ1 may have a point about Harmoney's (feeble?) recovery efforts/ debt sale prices system