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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
There are no reservations toward any of these per se, but lending is regulated to ensure it is conducted responsibly. Retail lending in New Zealand is regulated under both the FMCA and the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and their respective associated regulations.
Under the CCCFA, lenders must follow responsibility principles which, among other things, exist to prevent borrowers being offered loan products that are unsuitable to their financial capacity.
There is limited information available on the climate in relation to factoring or finetrading in New Zealand.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
Providers must register as Financial Service Providers in accordance with the FSPA with the associated costs as outlined at 1.a. ii. above.
A licence must be obtained if financial advice is given as an ancillary service with the associated costs as outlined above at 1.b. ii. P2P lenders are not required to get a licence but may do so if they are eligible. The benefit of being licensed is that disclosure obligations are less onerous.
New Zealand has recently updated its Responsible Lending Code. Most notably, this reform has made the requirements for lenders to enquire into a potential retail borrower’s ability to service a loan. Lenders are required to be compliant with this code and the CCCFA regime at large.
Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area
Providers will need to also comply with New Zealand’s AML, privacy and consumer laws and regulations.
Economic conditions
Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area
Limited information is available for FinTech applications, with the overwhelming volume of lending still conducted by banks.
Additional comments regarding the economic situation for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services or what FinTech’s must be aware of in this business area
N/A.