How Zopa minimises risk

We've been managing risk for over 10 years.

Zopa has some of the lowest default rates in the industry because we're very selective about who can borrow.

Your money is automatically spread across multiple sensible borrowers to diversify risk.

Zopa Safeguard Trust is designed to protect you from potential losses. Safeguard has a 100% track record of protecting lenders from defaults since launch and is funded from fees paid by borrowers.

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

View our default rates

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 and a maximum of 2% of your total money on offer with Zopa is lent to any one borrower.

Zopa's Safeguard Trust

You don't need to take any action if a borrower misses a payment. We chase them for you and if they get 4 months in arrears loan contracts are assigned to Safeguard to claim for the outstanding loan amount. Safeguard will usually pay the claim, but does reserve the right not to, and in this case seek to recover the amounts owed on your behalf.

Since Safeguard's launch all claims on loans covered have been paid, although there is no guarantee this will always be the case.

The amount of money in our Zopa Safeguard Trust is based on the estimated default rate for each borrower, and an assessment of whether there is enough money in the fund to make estimated pay-outs.

View Safeguard Trust coverage

Jargon buster

when a borrower has a repayment overdue.
when a borrower can no longer afford to pay the rest of their loan.

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, Zopa has planned for an independent organisation to take over the administration of your loans.

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 £1.18bn

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