About Zopa Safeguard

Updated 8 months ago

The P2P investment side of Zopa is closed. Through the purchase of the peer-to-peer portfolio, all investors have now received their funds back. You can find more information on the closure in the ‘Changes to P2P investments’ section of our FAQs.
As of 30 November 2020, the Safeguard Fund was wound down with the remaining balance paid to investors. Investors affected have received email communications about the payment and how this impacts them.

We retired products with Safeguard coverage 1 December 2017. From 2013 to 2017, some of our products were offered with coverage from a provision fund called Safeguard. During that time, it was a tax-efficient way for investors to offset bad debt against interest on their loans. It worked by buying up bad loans and paying back the investor. And, to date, all claims on Safeguard have been paid out.

In 2015, HMRC made some changes. New guidance meant investors could make a claim for tax relief on peer-to-peer losses directly. With the primary reason for the fund now removed, we took the decision that from 1 December 2017, we could retire all products with Safeguard coverage.

The Zopa Safeguard is a fund held in trust by a not-for-profit organisation. As the fund is held in trust this means the money in it cannot be used by Zopa and there are rules for how the fund can be used.

The fund was created to step in if a borrower gets into financial difficulty and can’t keep up with their repayments, to the point where they are behind on their loan by at least four months’ worth of repayments. At this point the Trustee and Zopa would work in conjunction to give you the money you are owed (the remainder of the money you lent them, plus any interest due on it up to that point in time).

The Safeguard fund has covered all bad loans since it launched, but of course there is some risk it may not always be able to do so. The fund is not covered by the FSCS. Find out more about what happens if Safeguard is unable to step in.

Zopa provides the money for the Safeguard fund. When a borrower is approved for a Zopa loan they pay a fee which covers the basic running costs of the company, including our loans team and the technology behind our website, and a contribution to the Zopa Safeguard. To determine the rate for the borrowers (the APR), the tracker rates add an applicable borrower fee which includes an amount to cover Zopa Safeguard.

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