What the new peer-to-peer regulations mean for you

In June 2019, the Financial Conduct Authority’s (FCA) released its final review of peer-to-peer (P2P) platforms and introduced a number of new rules. Today, December 9th 2019, the new regulations have come into effect. 

At Zopa, we welcome these new regulations. In a lot of instances, they simply formalise best practices we’ve already been following. However, there are some areas we’ve been working on. In this blog, we’ll outline the changes we’ve made and what they mean for you.

Appropriateness tests for new investors  

If you’re coming to us for the first time, we’ll ask you some questions about Zopa investments to determine whether they are right for you. These cover everything from projected returns to how we diversify your money. We believe it’s of paramount importance that customers understand what they’re investing in and this approach helps us to check this more comprehensively in the sign-up process.  

Once we know the product is right for you, we’ll confirm how experienced you are with peer-to-peer investing. This helps us decide on an appropriate level of investment for you. If you fall into the definition the FCA refers to as a ‘restricted investor’, you should limit the amount you invest into peer-to-peer to 10% of your net assets. If you’re what the FCA refers to as a ‘sophisticated’ or ‘high net worth’ investor, these restrictions will not apply to you. Find out exactly what each of these categories mean here.  

Yearly certification  

If you’re already a Zopa investor, once a year you’ll be asked to reconfirm your level of experience with P2P. It’s all done online in a few simple steps.  

As mentioned above, according to the new FCA regulations, if you’re less experienced you shouldn’t invest more than 10% of your net assets in P2P until you’ve gained more experience. This approach is in line with what we have seen from our customers, who typically fund an initial amount and then build up their portfolio as they monitor how their Zopa investment performs. Taking that extra time to study your investment allows you to improve your understanding of P2P investing, making sure it’s right for you.  

After you’ve certified, you’ll see a recap of how investing with Zopa works. We firmly believe that all Zopa investors should have a clear understanding of how we operate. It will be information that you are already familiar with, but we ask that you read through it carefully. 

Loan book  

The Zopa loan book has undergone a refresh. For those that love to delve deep into each column and row, we’ve got some good news: there are now even more fields to dig into. The extra info should help to give even greater transparency and insight on each loan you’re invested in. 

To help you make sense of things, we’ve created a glossary of all the terms you’ll find in your updated loan book. Click here for the glossary. 

How Zopa has performed 

We’ve always provided details on how Zopa investments have performed, but the FCA has now outlined a standard approach which will allow you to view returns performance by product and year.   

Risk management and governance 

Zopa has long taken a rigorous approach to risk management and governance and, as part of our authorisation process to receive a banking licence, we have continued to build on this.  

The FCA has now raised the bar for the wider industry to make that ethos more consistent across P2P platforms. 

What now? 

The changes outlined above are now live for our investors, but we will be continuing to work with the FCA to ensure the rules are working in your favour. If you have any more questions about how this affects you, please drop us an email contactus@zopa.com