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Updates on the consumer credit market

As of 30 November 2020, the Safeguard Fund was wound down with the remaining balance paid to investors. Investors affected have received email communications about the payment and how this impacts them.

Last month we shared our view on the UK consumer credit market, and what it means for the loans you’ve invested in at Zopa.  We also set up an email address to hear your questions.  Thanks for all the emails that you have sent, we read them all.

In this post, we’ll give an update on our view of the market and look to answer some of the common themes in your questions.

Consumer credit outlook

We continue to monitor leading macroeconomic indicators carefully alongside how Zopa loans are performing compared to expectations.

The trends in the wider UK market we mentioned last month, like levels of defaults and personal insolvencies, remain evident. Within Zopa, our outlook for loans remains the same as our last update, meaning our expectations have not changed since August.

What we’re doing to manage risk

Many of the questions you sent to asked about what changes we’re making to our risk management approach, particularly in light of developments in the wider consumer credit outlook.

Since our last update, we launched our new credit risk scorecard. This is the model we use to assess the credit risk of borrowers applying for loans (which determines whether we accept a borrower or not, and if we do, what risk market they go into).

Our new model mixes proven traditional techniques with more cutting edge data science approaches that new technologies have unlocked, and replaces our previous model that we launched in April 2015. The new model not only uses more advanced techniques, but is also built on more data, and more recent data – all of which means it improves our ability to assess loans in today’s market.


We’ve also had some questions about how we will manage risk on non-Safeguarded loans once we retire Access and Classic.

Over the last 12 months 67% of our lending has been non-Safeguarded, and as of the end of last month, non-Safeguarded loans accounted for 64% of the whole Zopa loan book. So, managing risk on non-Safeguarded loans is something we’re already doing (and did from 2005 up until the launch of Safeguard in 2013).

Our principles remain the same, regardless of Safeguard. We still believe in prudent risk policies, diversification, and effective collections and recoveries policies.

As our expectations of defaults increased, we have increased our prices, so that the returns we target for investors in each risk market remain the same. Given the current climate, we’ve increased the mix of lower risk, lower return A-B loans in our products, which is why our target rates reduced.

Please keep your questions coming to