Safeguard

In 2013, we introduced Safeguard: a provision fund to cover losses for our lenders during a normal economic environment. Safeguard covers lenders investing in Access and Classic.

We fund Safeguard based on our expected lifetime default rates. We monitor the coverage of our Safeguard fund to track it’s ability to pay out when a loan defaults. We aim to have a coverage of 1.1x what we expect the fund to pay out.

Safeguard is not a guarantee on your investment. To date, all claims on Safeguard have been paid; but there’s no guarantee this will always be the case.

Total in Safeguard fund today

£12,621,833

Current coverage

1.2x

Last updated: 14th September 2016

Loss rate and Safeguard buffer

We fund Safeguard based on our expected lifetime default rates for loans which are covered by Safeguard. In addition to our expectations we add an additional 10% buffer.

If actual defaults are lower than expected, this buffer would increase.

If actual defaults are higher than expected, then Safeguard would struggle to repay the expected interest.

Safeguard responses

Last updated: September 2016

  • We fund Safeguard based on our expected lifetime default rates for loans which are covered by Safeguard. In addition to our expectations we add an additional 10% buffer.
  • If actual defaults are lower than expected, this buffer would increase.
  • If actual defaults are higher than expected, then Safeguard would struggle to repay the expected interest.

This graph demonstrates what would happen to interest rates and how Safeguard would perform under different default rates. This data reflects the current state of Safeguard across all loans covered by the fund, lender interest rates will differ depending on their individual loan books

Fund usage and principal repaid

This table shows what’s left the Safeguard fund compared to how much we put in to cover that batch of loans. We also look at the amount that has been paid back to understand whether the fund usage is in line with what we would expect at this stage of the loan lifetime.

Actual bad debt
fund usage
Repaid
2016 10% 11%
2015 45% 40%
2014 69% 69%
2013 60% 89%

Important information

Before you go any further, remember past performance is not a reliable indicator of future results. And forecasts are not a reliable indicator of future performance.

Read more about risk information.

Zopa's public loan book showing historical performance is available for download.

To date, we've helped 63,000 individuals lend out over £1.72bn

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