Harmoney does not want your money

New Zealand’s biggest peer-to-peer lender will soon stop accepting money from investors.

Harmoney launched in 2014 as a platform to connect willing investors with borrowers who wanted a loan.

It offered investors a way to get a better return on money than they would from having it in the bank. Interest rates increased according to how risky a borrower was deemed to be.

But while it marketed itself as ‘‘peer-to-peer’’ the majority of its lending has always been backed by institutions, particularly Heartland bank. Over time, the proportion of retail funding backing its loans – that’s money from ‘‘mum and dad investors’’ – has shrunk.

It has issued more than $1.5 billion in loans.

Now, it says it will no longer accept investments from the general public from April 1.

It stopped accepting new investor applications on Thursday. Existing investors will receive interest and repayments on the loans they hold but will not be able to facilitate any new loans after April 1.

Chief executive David Stevens said the platform wanted to focus on borrowers and managing 10,000 retail lenders took a lot of resources.

He said he expected to see more providers moving away from peerto-peer when the market was not deep enough to sustain it.

As the businesses grew, it was harder to maintain the supply from investors for loans, he said.

‘‘It was not a decision we took lightly, we’ve been thinking about it for some time,’’ he said.

It made sense to enact the change at the end of the tax year, he said.

Smaller operators who were able to get the majority of their funding from retail investors might be able to continue without a problem, he said. But those who wanted to grow would require alternative funding streams. Borrowers would not notice a difference.

‘‘While a move we make reluctantly, it is necessary to free up resources so that Harmoney can continue to innovate, enhance value and create a better user experience for borrowers.’’