Peer-to-peer lender Zopa to allow investors to sell late loans

By Ryan Weeks on Friday 2 June 2017

Alternative Lending

Zopa announces further tweaks to go alongside the phasing out of its Safeguard fund.

Zopa, the original peer-to-peer lending platform, will now allow investors to buy and sell loans that have previously been in arrears. Until now, investors in the Zopa Plus account have not been able to sell late loans on the platform's secondary market, nor have they taken the coverage of the platform's Safeguard. The same can be said of investors who hold loans of a vintage that pre-dates the launch of the Safeguard. This latest tweak is an attempt to resolve that asymmetry, bringing all of the platform's investors onto a level playing field.

In a summary of the changes, Zopa stated the following:

“We have amended Principle 4.9.5 to allow Lenders to use the Rapid Return Facility in respect of Loan Contracts which are not covered by the Zopa Safeguard Trust and where the Borrower has previously missed a Repayment.”

Zopa is currently in the process of changing the way it calculates its projected returns to better reflect the real-time value of loans. These changes will allow it to give a more personalised view of the performance of investor portfolios, based on each micro-loan's actual performance. 

Previously, projected returns for investors were an annualised prediction of how a portfolio would perform, based on the average performance of similar loans and portfolios on the Zopa platform. The more timely, personalised view of performance that Zopa will soon be able to provide to investors is closely linked to the firm's decision to allow those investors to begin buying and selling loans that have been in arrears.   

These changes come shortly after an overhaul of its investor offering that included folding its Access and Classic accounts into a new Zopa Core product, with a targeted return of 3.9 per cent. Henceforth, no Zopa loans will be covered by the Safeguard, and the provision fund itself will be fully wound up by December 2022.

After recently receiving full authorisation from the regulator, Zopa intends to launch its long-awaited Innovative Finance ISA product in under two weeks.

Meanwhile, the platform continues its pursuit of a banking licence, and only this week clinched a £32m investment to support the application. The fundraise was led by Indian finance giant Wadhawan Group and European venture capital fund Northzone. 

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