This Supplementary Order Paper proposes amendments to the Credit Contracts and Consumer Finance Act 2003 (the Act). The amendments proposed relate to the definition of credit fees in the Act. The Financial Markets Conduct Act 2013 (FMCA) enables peer-to-peer lending services to be offered in New Zealand. However, the Act predates the FMCA and did not contemplate licensed peer-to-peer providers acting as intermediaries to provide credit contracts. Consequently, some uncertainties have emerged about how the Act applies in the context of peer-to-peer lending. In particular, there has been uncertainty about whether fees charged by licensed peer-to-peer intermediaries for their services in matching lenders with borrowers and in arranging peer-to-peer loans are credit fees for the purposes of the Act or not. The proposed amendment is intended to clarify that such fees are not credit fees for the purposes of the Act.

The effect of the proposed amendment is to confirm that licensed peer-to-peer lending intermediaries can include a profit component in fees a licensed peer-to-peer intermediary charges a borrower (which the Act would prohibit if the fees were credit fees). The proposed amendment relates only to fees payable to licensed peer-to-peer lending intermediaries. It does not relate to fees payable to or for the benefit of creditors who make the peer-to-peer loans. If a licensed peer-to-peer lending intermediary is the economic owner of the loan (in whole or in part), it will not benefit from this exclusion.