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Zopa’s lending policies

Andrew Lawson - Zopa's Chief Product Officer

In light of recent events in the UK P2P market, and questions we have received,  we thought it would be helpful to remind, and clarify our lending policies.

With the support of our customers, we have (as of 20 July 2017) lent £2.46bn since we launched in March 2005.

We’ve grown a lot since we first started, and are now lending around £80m per month, that’s more than we did in the first 5 years.

But, despite that growth, we’ve remained true to our principles.

Focus and Prudent Risk Management

We stick to what we know best – consumer lending in the UK.  All our loans are direct to individual UK consumers.  We’ve built our track record and expertise of consumer lending in the UK over the past 12 years. We believe this helps us take better decisions on who to lend to, and under what conditions.

It’s not just about experience; we use data to make better decisions, and our history, including through the 2008 financial crisis, provides a rich data source that determines our risk policies and loan pricing. This doesn’t mean that we will always get everything right, but we give ourselves the best chance to do so with our focus and prudent culture.

Diversification

We have always believed diversification is a key tool for individual investor risk mitigation.  We spread your investments across multiple loans, starting in £10 chunks, so that no one borrower has more than 1% of your overall investment.

In sticking to UK consumer lending, the maximum amount we lend to any individual is £25,000 (not including fees) – which further adds to the diversification of the platform.  For example, in June 2017 the £83.4m we lent was spread across 11,964 borrowers.

Transparency

We recognise how important trust is.  Key to building trust with our investors is being transparent about where their money is being lent.  That’s why we’ve always shown individual investors which loans they own, and how they are performing, in their individual loan books.

We also share the whole platform performance by publishing our entire loan book, and share up to date lending and performance data with the P2PFA on a quarterly basis.

These principles remain core to lending at Zopa, and we remain committed to them.

Andrew Lawson is Chief Product Officer at Zopa.