Zopa is responsible for taking all reasonable steps to identify and manage any conflicts of interest in the business that might arise, in particular in relation to the operation of the Lending Platform. We are obliged to maintain and operate arrangements to prevent any conflict from giving rise to a material damage to the interests of Zopa Members. We must also establish, implement and maintain an effective conflicts of interest policy. This document is our conflicts of interest policy (“Conflicts Policy”) in so far as it applies to the operation of the Lending Platform.
We are committed to maintaining the highest of ethical standards and complying fully with our regulatory and legal obligations. Compliance with this Conflicts Policy is a requirement of the employment contract of every employee and any breach may lead to disciplinary proceedings, up to and including dismissal.
2. Identification of potential or actual conflicts
A conflict of interest may arise where either of us, or any of our employees, directors, outsourced service providers or any person linked by control to either of us ("relevant person") is providing a service to Zopa Members, or engaging in activities on their own account, which may entail a material risk of damage to Zopa Members’ interests, for example where either of us or any relevant person:
- could make a financial gain, or avoid a financial loss, at the expense of a Zopa Member;
- has an interest in the outcome of a service provided to the Zopa Member or of a transaction carried out an behalf of the Zopa Member, which is distinct from the Zopa Member’s interest in that outcome;
- has a financial or other incentive to favour the interest of one Zopa Member, or group of Zopa Members, over the interests of another Zopa Member;
- receives or will receive from a person other than the Zopa Member, an inducement in relation to a service provided to the Zopa Member, in the form of monies, goods or services, other than the standard commission or fee for that service.
3. Actual or potential conflicts of interest we have identified
Because of the nature of the Lending Platform, we may be regarded as providing services to both borrowers and investors. We will charge a Borrowing Fee to borrowers for enabling them to borrow on the Lending Platform, as specified in their Personalised Quote and any subsequent Loan Contract (if agreed), and this fee will include an amount estimated by us to reflect the potential for a Default, based on the Credit Rating applicable to their Loan Contract. We charge investors an Annual Lender Fee based on the loan principal outstanding that each Lender has outstanding to borrowers under Loan Contracts (except the principal outstanding under Loan Contracts in respect of which one or more payments have been missed and have not been brought up to date).
Our rights and obligations in relation to such fees are as set out in the Zopa Principles which set out the extent of our obligations to both borrowers and investors. We may also share payments received or make payments to third parties for introducing Zopa Members to us. We will make appropriate disclosure of such arrangements in the rules applicable to any related promotions or otherwise on request.
4. Gifts and entertainment
Gifts and hospitality can lead to potential conflicts of interest. We have a strict policy regarding such issues.
A conflict of interest may arise where an employee has a direct or indirect interest in a transaction. This may include where the employee has a connection with the other party to the transaction or where the employee’s family has such a connection – in particular a connection with a Zopa Member. A connection may include being a director or having a significant shareholding or being an employee or consultant to any Zopa Member. Employees are required to disclose any connection which could, or could be seen to have the effect of compromising the judgment of any employees. Employees are required to notify us of any material interests of this kind that they may have.
6. Managing conflicts of interest and disclosure
We shall use all reasonable efforts to manage any conflict of interest.
If we believe there is still a significant risk of damage to Zopa Members we will consider appropriate disclosure.
We will maintain appropriate policies and procedures as well as training to ensure employees identify circumstances which give rise to a potential conflict of interest and to enable them to manage such conflicts.
We will monitor conflicts which arise.