Zopa Innovative Finance ISA
The Zopa IFISA product range offers the same rates as those on its standard lending platform.
- Zopa Core – Target returns of 4.0% p.a.
- Zopa Plus – Target returns of 4.6% p.a
Zopa Plus invests in riskier loans than the Core, hence the slightly higher rate this account offers.
- The minimum investment into an ISA is £1,000.
On its website, Zopa states that it minimises its investors’ risk in three ways – “a prudent credit risk policy, diversification and an effective recoveries policy”.
This is through loan diversification, missed payment management, and the Safeguard service for its Access and Classic investments.
Safeguard is a central compensation scheme, which specifically steps in when a loan is classed as defaulted. It the buys the loan, and repays the capital as well as up to four months of missed interest.
Important: A loan is considered to default if no repayments have been made for four months. This could result in a loss of your investment funds.
The Zopa platform itself matches investments directly to loans. When it receives investments, Zopa will automatically lend your money out in chunks, to a range of borrowers.
“If you invest £1,000, no one person would have more than 1% of your overall investment,” Zopa advises.
In the case of wanting easy access to the lump sum of your investment, you can sell your outstanding loans to other investors. To do this, there must actually be other investors in the market. Zopa states that there have always been other investors in the market, and the process usually takes just a few days.
Do note that there is a 1 per cent fee in the Classic and Plus products, and that if the market rate for loans has changed, you could be selling your loan at a lower rater than a new loan – you might need to pay a small fee covering the difference.
Zopa’s entire website is hugely user accessible and all products and information is clearly explained at every stage through FAQs, coherent videos and bitesize copy. Although Zopa’s waiting list meant that we couldn’t have a play around a bit with the platform, the three main steps are clear:
- Set up an account
- Transfer your money
- It is automatically split up into small loans, lent to lots of different borrowers, each at a fixed rate
Zopa has been consistently innovative and market-leading in peer-to-peer, so you should be able to expect slick processes, and also its trusted status.
Despite this, the rates on offer do not match the best IFISA rates in the market.
When the regulatory hurdle has been conquered, and the product has been released, it would be interesting to know the how surge in investment through this industry giant, compares to its peer-to-peer cohorts.
Updated: Wednesday, November 28th, 2018