Peer-to-peer lending involves a person issuing a debt security to another person, generally for personal, charitable, or small business purposes.
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).
What is a peer-to-peer lending service
A peer-to-peer lending service provides a facility (such as a website) where offers for debt securities (such as loans) can be made. The primary purpose of the peer-to-peer lending service is to match lenders (otherwise known as investors) with borrowers.
Licensing and registration
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).
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.
The fees payable to the FMA when you apply for a peer-to-peer lending service licence under the FMC Act is $6,238.75 (excl. GST). The fee includes 40 hours of assessment hours. We may change an additional fee at the FMA hourly rate where our assessment of an application exceeds the included number of hours. If an additional fee is changed for your application, we will let you know in advance and provide you with a reason for this. We may also invoice you for any costs of external advice or assistance.
The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.
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.
The table below (see levy class description) provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
Levy Class description
The table below provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
Persons making an application for registration on the Financial Service Providers Register
Registered banks and licensed non-bank deposit takers
Licensed supervisors of debt securities and managed investment products in registered schemes
Managers (of registered schemes)
Persons who undertook trading activities on licensed markets, contributory mortgage brokers, trading financial products or foreign exchange on behalf of other persons (other than persons included in class 6A, 6B, 6C or 6D, authorised bodies that only provide the service under a market services licence held by a person in class 6A or 6D and DIMS wholesale providers) or licensed derivatives issuers
Licensed discretionary investment management service (DIMS) retail providers
Providers of a regulated client money or property service (as defined in section 6(1) of the FMC Act) other than persons included in class 6(a) or 6C
Custodians and persons providing custodial services
Crowdfunding service providers and peer-to-peer lending service providers
Licensed financial benchmark administrators
Licensed financial advice providers
All other financial service providers that are not included in any of classes 2 – 6H
Listed issuers (other than persons included in class 8A)
Small listed issuers
Lodgement of a product disclosure statement (PDS)
Licensed market operators
Licensed market operators that operate growth markets (other than persons included in class 10)
FMC reporting entities that lodge financial statements (or group financial statements) and auditor’s reports
Licensed overseas auditors
Persons that apply for registration or incorporation under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
Persons that are registered or incorporated and required to make annual returns under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
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.
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 firstname.lastname@example.org 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.
How to pay
Electronic deposit or internet banking
Where bill pay is available please select ‘Financial Markets Authority - Other' Otherwise, our bank details are: Bank: Westpac Account name: Financial Markets Authority Account number: 03-0584-0198005-000
To ensure we process your payment correctly please provide the following information: Particulars: Payer’s name* Code: Waiver Reference: Applicant’s name You do not need to forward a hard copy of your application if paying electronically
* 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.
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.
Peer-to-peer lending service licensees are required to notify the FMA when there has been changes to directors, senior managers and 'key personnel'. The following notification form should be emailed to email@example.com.
You will also need to notify any change of directors to the Registrar of Companies Office, and any change of senior managers and key personnel to the Registrar of Financial Services Providers.
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.
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.
The date by which returns for the period 1 July 2020 – 31 June 2021 need to be submitted has been extended to 30 September 2021.
Licensees obligations include notifying the FMA of certain events and providing us with information. All notifications should be emailed to the FMA at firstname.lastname@example.org, noting the relevant obligation in the subject line of your email. Refer to the standard conditions section for information of what needs to be notified to the FMA.
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:
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 FMA publishes guidance that outlines our expectations and how we will monitor certain activities. The following guidance applies to licensed peer-to-peer lending services.
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.
Publishing default rate information
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 guidance.
Compliance assurance programmes
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.