P2P lender Harmoney changes key fee after earlier reducing borrowers fees amid the backdrop of a Commerce Commission review

The fee works out to hundreds of percent more than their current fee on a loan, and in return investors get nothing extra in return. Smaller investors are also penalized by a higher charge than bigger investors, there is no justification for that. I will be making no further investments in this platform, as loans I have invested in are repaid I will be withdrawing the funds and reinvesting them in a good P2P lender.

The fees probably won't change significantly for me. The saving on rewritten loans will likely counter a proportion of it. They've been clipping the ticket on the rewrites while investors get nothing (and lose an active loan).

The amount they take from interest is large but the previous fee was large anyway. I'll just have to see how this pans out.

I will take time to work through this. With $22,000 in loans, I don't know how this will affect me, but what I can intuitively see is that there is possibly more penalty if I'm investing 10 x $100 instead of 1 x $1000.

Another point that just occurred to me, Harmoney's examples all use an example of an investor having 15k invested, when by their own stats a few months back the average for a retail investor was around 6k, so to be more realistic they should of used the higher fee rate.

It would appear that the only winner here is Harmoney. I have an "average" retail investment and will be doing a few sums in the coming month to determine whether to start running my portfolio down.

Not really sure what the fuss is about. After a quick look, assuming a loan is lent at 10%, the interest rate is 8.25%. It's not that oppressive and far easier for the lender.

Currently with the 1.25% system of fees on principal and interest payments received, Harmoney is effectively charging me 7.65% of the gross interest i earn, driven higher by rewrites. Moving forward new loans will incur me 15% fees. If I had less invested the rate would be up to 20%. In round numbers this is between a doubling and tripling of fees depending on principal invested. The example they provided which seems to balance out this increase does not apply to A and B grade that did not increase interest rates last December and rely's on the proportionally higher rate increases moving down into the junk grades to achieve this illusion. Regardless of the impression created by the RAR numbers the simple fact is that fees have been grossly increased. None of the loans I am invested in have increased interest rates and my fees to Harmoney have doubled.

Any business that doubles it's prices overnight is cause for concern. Regardless of how the circumstances of your portfolio may externalise the losses is irrelevant, totally beyond their control and irresponsible to assert.

There have been no increases to A and B grade interest rates so no offsetting income. Fees approximately double. What urks me even more is that fees are not charged on net income so they have little incentive to chase poor payers.

Finite mentioned their decency for not making the change retrospective but this is a bit generous, the original terms and conditions of those loans would preclude such a change. The solution I have to engage is that post June 13 I will have to keep two sets of records and for loans originated after that date I will avoid grades safer than A4 and dip a little deeper into the C grades to improve my RAR to claw back the costs of the new fee structure. Higher risk to me more money to Harmoney. Steering lenders into more risky loans grades that recently had their interest rates raised? Who wins in this scenario?

Here's a final analogy. Gonzo and Jaycee rent a vehicle from the fictional company "hurts". This vehicle facilitates them in their business activities to drive around and to engage customers and grow a profit. Months pass and upon re-engaging the services of "hurts" they are now told that "hurts" not only recognises, but takes credit for the growth of their profits. Subsequently "hurts" now demands that due to their services "hurts" is entitled to an actual share of the profits based on the activities of Jaycee and gonzo who used their "vehicle" and that the agreement will be changed from a fee for service basis to a zero liability partnership entitling them to 15-20% of Jaycee and Gonzos profits. Sadly "hurts" has a monopoly so Gonzo and Jaycee have no alternative such as "Avus" or "Budgee".

I used to be an enthusiastic Harmoney investor but became disillusioned with their rewrites policy - especially their practice of offering rewrites to customers who had demonstrated good repayment habits. Unsolicited rewrites seem to me to be unethical. When the fees changed I didn't take much time to calculate the actual costs to me, I just firmed in my resolve to run down my portfolio and maybe give Squirrel a go. I suppose the people who adopt my approach will be replaced by new lenders paying the increased fees so Harmoney will think that's ok, so long as there are not too many of us.

As it always happen, a perfectly good cause gets hijacked by greedy buggers, whom soon enough turn it into their own private cash cow. This will make the banksters happy, eliminate competitors always does.