All About Zopa

What exactly is Zopa?

Zopa is the first lending and borrowing exchange. What we do is very simple: we put people who want to lend in touch with creditworthy people who want to borrow, so both parties can get a great deal.

Who's behind Zopa?

Zopa is led by Richard Duvall – the creator of Egg. Zopa is backed by Benchmark Capital, (the venture capital firm which backed eBay), Wellington Partners and Bessemer Venture Partners (the VC firm which backed Skype). You can find further information about the Zopa team on the About Us page.

Why has no one done this before?

The principle behind Zopa is very similar to local micro-lending schemes that operate in Asia and Latin America. Families, neighbours or friends will lend amongst themselves, often a very structured way, to the benefit of the community. Because the groups are closely knit, trust is not usually an issue.

The growth of the internet, the advance of verification and credit scoring technology, and changing attitudes to corporate institutions have combined to mean this method of lending and borrowing is now viable for everyone.

What does ‘Zopa’ mean?

Zopa is a term taken from business theory. It stands for Zone of Possible Agreement and is the overlap between one person’s bottom line (the lowest they’re prepared to get for something) and another person’s top line (the most they’re prepared to give for something). It’s the way people negotiate all sorts of stuff - buying a car, getting a mortgage - even a teenager negotiating with parents about staying out late. If there’s no Zopa, there’s no deal.

Who can become a member of Zopa?

If you're interested in borrowing at Zopa, or if you want to lend a figure less than £25,000, you need to be an individual over the age of 18, who's resident in the UK and who has a UK current account and a personal Equifax credit rating.

If you want to have more than £25,000 lent out to Zopa borrowers at any one time, or if you're lending in the course of a business, you will need to hold a Consumer Credit Licence. We can help you apply for this licence - to find out how, drop an email to powerlenders@zopa.com with your contact details, and we'll be in touch.

Why would anyone want to use Zopa? What’s wrong with banks?

Increasingly, people want to make their own choices, especially when it comes to their finances. They don’t want a faceless corporation or a frosty institution to dictate what they can and can’t do. Zopa allows lenders and borrowers to do just this.

Successful lenders and borrowers should get a great deal as Zopa cuts out the traditional middlemen – the banks, building societies and finance companies.

Zopa members can be part of something new, exciting and revolutionary that could change how people trust each other with money.

Zopa is also transparent: it's clear to everyone what is going on, lender set their own terms and borrowers receive the rate that's right for them.

How does Zopa make money?

Zopa makes money by charging lenders and borrowers a fee - borrowers pay 0.5% of their loan amount and lenders a 0.5% annual service fee.

Zopa also receives commission if a borrower chooses to take out repayment protection insurance from our insurance underwriting partner, Pinnacle Insurance plc.

And Zopa earns money through helping people who can't borrow at Zopa by introducing them to other loan providers if they so wish.

Does Zopa receive interest on unlent money?

No. Zopa lenders first transfer the amount they wish to lend into their Zopa holding account. This is a segregated account which is operated by Zopa and specified as containing money owned by Zopa members. The money in the segregated account does not form part of Zopa’s capital, nor does Zopa earn any interest on those funds: the interest earned is paid to the Zopa lenders.

What happens if Zopa fails?

Zopa is a new company and has a chance of failure. However this risk is balanced by the experienced financial services team who set-up Egg and by experienced investors, Benchmark, who backed eBay.

In the event of a total business failure, the loan agreements still stand because Zopa is not a party to any loan contracts; it only provides the mechanism for agreeing them. The repayments will continue to be collected by Credit Resource Solutions Ltd, the collections agency that is appointed by Zopa lenders to collect missed payments under the Zopa Principles. The costs of collections activity will not vary if Zopa has failed.

However, prior to Zopa's establishment as a secure business, any lender should consider all risks before choosing to lend at Zopa.

Is Zopa regulated?

Zopa has received credit licenses from the Office of Fair Trading (No. 563134). Zopa is a member of the Finance and Leasing Association and is also a member of CIFAS and National Hunter – the UK’s two leading anti-fraud associations, and we are registered with the Office of the Information Commissioner (No. 2879078).

The company registration number of Zopa Ltd. is 05197592, and its registered office is 3rd Floor, Radiant House, 36-38 Mortimer St, London, W1W 7RG.

Zopa Limited is authorised and regulated by the Financial Services Authority only in respect of its insurance mediation activities relating to Zopa Repayment Protection insurance, although Zopa must also comply with the “Higher Level Standards” that apply to all firms authorised and regulated by the Financial Services Authority.

The protection afforded to Zopa Members by the Financial Ombudsman Service and Financial Services Compensation Scheme applies only in relation to Zopa’s insurance business. The procedures for handling complaints by Zopa Members in respect of Zopa’s business other than its insurance business are stated in Principle 16 of the Zopa Principles (“System Complaints and Dispute Resolution”), and entitle Members to refer disputes to the Conciliation and Arbitration Scheme of the Finance & Leasing Association or the Chartered Institute of Arbitrators. Zopa Limited is entitled to the protection of the Financial Services Compensation Scheme in respect of the Zopa segregated accounts at Royal Bank of Scotland that are used by Zopa Members in the course of lending and repaying money at Zopa. Any monies recovered by Zopa as a result of a claim under the Financial Services Compensation Scheme in respect of money held in those segregated accounts would accrue to the benefit of the Zopa Members whose money was in the accounts at the time when the entitlement to make the claim arose.

Will Zopa do mortgages?

For the time being Zopa will have markets designed for unsecured lending of up to £25,000. We are naturally looking at many other opportunities for growth in the future.

Can I invest in Zopa the company?

No. Zopa is a limited company that does not have publicly listed shares.

What are the Zopa Principles?

The Zopa Principles are our terms and conditions for joining and using Zopa. You can read them here