The primary risk inherent in peer to peer lending is that investors may not receive all of their monthly principal and interest payments due to loan defaults.
While Harmoney has a thorough and robust identity verification process to guard against fraudulent applications, there remains a possibility that borrowers may be fraudulent, with no intent to repay. Borrowers may be the victims of identity theft, in which case the person receiving the money has misappropriated the details of the person whose identity has been used to apply for the loan.
Borrowers may also experience a change of circumstances which affects their ability to repay, such as redundancy from their job, serious illness, or death.
Investors also take the risk that they may receive less than their original investment sum in the event that a borrower repays the sum of their loan at such an early stage that the interest accumulated is less than Harmoney's 1.25% Service Fee. Find out more about Harmoney's fees here.
Harmoney takes these risks seriously and has robust measures in place to minimise the likelihood of their occurrence. Harmoney is run by a team with a strong track record of risk management. We use fractionalisation to give investors the opportunity to spread their risk across numerous loans. Our credit underwriting process has been rigorously tested by independent sources, our systems, processes and documentation have been validated by our internal Legal Counsel and an external law firm to ensure compliance with the law, including responsible lending obligations under the National Consumer Credit Protection Act, the Privacy Act, the Anti-Money laundering and Counter Terrorism Financing Act, Competition and Consumer Act, and other relevant legislation. Our proactive collections process is thorough and regimented. You can find out more about Harmoney’s risk management measures in the FAQs.