How Zopa minimises risk

We've been successfully managing risk for over 11 years.

Zopa has some of the lowest default rates in the industry because we're very selective about who can borrow. Across all products your money is automatically spread across multiple sensible borrowers to diversify risk.

We also provide our lenders with choice where risk is concerned. Our Zopa Access and Classic products have the additional provision of Safeguard cover. Safeguard has been set up to cover expected losses arising from borrowers defaulting on loans. Since Safeguard's launch all claims on loans covered have been paid, although there is no guarantee that this will always be the case.

You can also choose to lend in our Zopa Plus product which has a higher projected return in exchange for taking on a wider range of risk markets, carrying a higher risk and no Safeguard cover.

Introduction to risk

Learn about the three ways Zopa minimizes risk to lenders

Show transcript


At Zopa we've been lending for more than 10 years, and have an unrivalled track record of performance. We help lenders minimise risk in three ways:

  1. We only lend to sensible borrowers who meet our strict criteria that have been developed over our 10 years.
  2. We diversify your money by splitting it into smaller amounts - micro loans - which are lent across a range of borrowers. We do this to ensure that only a small amount of your money is lent to an individual borrower, so if one borrower cannot repay their loan, this will only impact one micro loan in your portfolio. This reduces your risk and provides you with much more stable returns.
  3. If a borrower does miss a payment and goes into arrears you don't need to do anything: we'll investigate and take the necessary action. If a borrower misses four consecutive payments, the loan is defaulted. Our Safeguard fund was set up in 2013 to protect lenders by paying back loans that default, so you can get your capital and any interest owed. It's not a guarantee, but it has covered 100% of eligible loans to date.

And unlike a bank, we publish our loan book performance data in full for anyone to see, because we believe in being held accountable for our performance.

What the press says

“The longest-running site, with good rates and risk spreading.”

Martin Lewis,, June 2014

Reliable borrowers and low defaults

We have a 11-year track-record of delivering some of the lowest default rates in the UK personal loans market. We achieve this by only offering loans to sensible borrowers who can afford to repay. They choose Zopa over other providers because we offer fairer rates and a better service.

View our default rates

We group our borrowers into risk markets which have different projected returns and expected default rates associated with them. Those who cannot afford a loan will not be successful in their loan application with Zopa

View our risk markets

Don't put all your eggs in one basket

Diversification is another important way of protecting your money. Your money is lent out in chunks as micro-loans starting at £10 and up to 1% of your total money on offer with Zopa is lent to any one borrower. Given the greater level of risk associated with loans in Zopa Plus, we have a minimum investment limit of £1,000 and therefore at least 100 microloans. This serves to diversify risk and reduce your chance of losses.

Managing Missed Payments

If a borrower misses a payment, Zopa will follow up with them in order to get them back on track with their repayments. If the borrower misses a repayment for four consecutive months, this is classed as default. Zopa in conjunction with a not-for-profit company called P2PS Limited will continue to administrate the loan.

At this point, if your loans are covered by Safeguard, a claim is made for the outstanding loan amount. Safeguard will usually pay the claim but does reserve the right not to, and in this case Zopa in conjunction with P2PS will seek to recover the amounts owed on your behalf.

Safeguard’s ability to pay out relies on having sufficient funds in Safeguard. The amount of money in our Zopa Safeguard Trust is based on the estimated default rate for each borrower in a similar economic environment, and an assessment of whether there is enough money in the fund to make estimated pay-outs. Since Safeguard's launch all claims on loans covered have been paid, although there is no guarantee this will always be the case.

Zopa lenders can choose Zopa Access or Classic which are covered by Safeguard.

View Safeguard Trust coverage

Lenders in Zopa Plus, which does not have Safeguard cover, do not need to take any action if a borrower defaults. Zopa in conjunction with P2PS Limited will continue to chase the borrower, returning any recoveries directly to the lender.

What the press says

“Zopa keeps its default rate low by lending to creditworthy people and breaking up investments into smaller chunks. Historical bad debt since 2010 stands at 0.21%.”

Love Money, 3 February 2014

Good business practice

Zopa has been operating since 2005. Zopa Limited is authorised and regulated by the Financial Conduct Authority (firm registration number 563134).

If Zopa were to go out of business, we have planned to use loan servicing fees to cover the ongoing costs of managing our loan book.

Zopa loanbook data can be accessed by anyone (on an anonymized basis). We maintain this transparency because we believe that being held accountable on a day-to-day basis by our customers, the industry, regulators and the media makes us a better business.

Read about operational risk mitigation

To date, we've helped 63,000 individuals lend out over £1.65bn

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