How Zopa minimises risk

11 years of successful risk management

Zopa has some of the lowest default rates in peer-to-peer. How? A combination of the right borrowers, diversification, and an effective, but understanding, recoveries policy.

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

Carefully selected borrowers

By only offering loans to people we are confident can repay, we can maintain our 11-year track-record of low default rates. They choose Zopa over other providers because we offer fairer rates and a better service.

View our risk performance

We put your eggs in many baskets

Diversification is another important way of protecting your investment. When you start lending your money with Zopa, you don’t give it all to one person. Your money is lent out in chunks, starting at £10. This means if you invested £1,000, no one person would have more than 1% of your overall investment.

This is especially important for Zopa Plus lenders, not covered by Safeguard, and is why we set a minimum investment of £1,000 to spread your investment as much as possible and reduce the chance of losses.

Managing Missed Payments

We make every effort to help our borrowers get back on track should they miss a payment. If they reach 4 months’ worth of missed repayments, this is classed as a default, and we begin our recoveries process.

At this point, if your loans are covered by Safeguard, the fund steps in and buys the loan, effectively repaying you: both your capital, and up to four months of missed interest. There are some restrictions around this; read more about how Safeguard works and what it does and does not cover.

Remember: Safeguard is not a guarantee on your investment.

Learn more about Safeguard

For Zopa Plus lenders, not covered by Safeguard, at this point we would count the default as a capital loss (some of your original investment would be lost), and this amount would be deducted from your Zopa Total. We’ll still work to make recoveries on these loans, and anything we do recover will be added to your Zopa Total.

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

Total accountability

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

We firmly believe in transparency in order to be held accountable to our customers and regulators. Our operational risk mitigation policy is available to everyone here.

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.

Operational risk mitigation policy

To date, we've helped 63,000 individuals lend out over £1.78bn

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