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Zopa to close ALL investor accounts - what this means for you

Zopa has this week closed all of its 60,000 existing investor accounts. If you're an investor, you'll be able to access your money by 31 January 2022 at the latest. If you're a borrower, nothing is changing and you should carry on with your repayments as normal. 

Peer-to-peer (P2P) lender Zopa blames the decision on a "lack of customer trust in P2P investments" as well as the cost of running the service. Here's what the move means for investors and borrowers. See below for an explanation on P2P lenders.

Investor accounts have closed and you'll get penalty-free access to your cash by 31 January 2022 

Here's what the move means for peer-to-peer investors, including ISA savers: 

  • Zopa investor accounts, including ISAs, have closed as of 7 December 2021. With these accounts, investors put in their cash, which was then loaned out by Zopa to borrowers. But Zopa now needs to buy these loans back in order to repay you your capital, so you can't currently access the funds in your account or sell your loans yourself. Zopa will begin buying the loans this month, starting with the newest through to the oldest. This process will be completed by 31 January 2022. However, if you need urgent access to your cash, you can contact the Zopa customer services team to talk through your options. 

  • You'll continue to earn interest until your loan is sold. Interest will be at your existing rate, which varies as it's based on an average of rates your money was lent out at. 
  • Once the loan is sold, your money will be automatically placed into your holding account. You should receive a confirmation email after each loan or tranche of loans is sold. You can then either withdraw the cash immediately or, if you're an ISA customer, you can find a new ISA provider and ask it to transfer out the final amount for you - see our What type of ISA should I get? guide if you need helping deciding where to switch to. You'll have access to all of your money by 31 January 2022. You won't earn interest on money in the holding account, as is the case now. 

'Fully research where to save your cash now - and make sure you're happy with the level of risk' 

Helen Saxon, money editor, said: "With Zopa closed to new investors and reinvestment of repayments for existing investors taking more than two months recently, the writing's been on the wall for Zopa investors for a while.

"There's now one fewer place for savvy investors who knew the risks to get a decent return. And those investors are now faced with deciding where to put what could be significant sums of money.

"Many will face a stark choice of accepting lower returns in normal savings accounts, or upping the risk - and the research needed - with investments in the hopes of higher returns.

"Whatever you choose, make sure you've fully researched your choice, and that if you do invest, you're happy with the level of risk on the investments you've chosen."

There's no real change for borrowers

Zopa says there is no impact on borrowers as all loans are serviced by Zopa Bank, which is a separate arm to the P2P business. Loan rates and all other terms and conditions will stay the same, so you need to keep making repayments as normal. 

The P2P market has taken a hit due to Covid-19

P2P lenders, like Zopa, act as financial matchmakers, meaning investors can put in cash to be lent out to individuals and businesses. Investors can sometimes get higher returns than they would with savings accounts, but they have to take a risk with their cash – we've always warned that peer-to-peer investing doesn't come with safety guarantees as savings do.

But many P2P firms didn't survive the Covid-19 pandemic; Ratesetter, for example, also closed all of its investor accounts earlier this year. And even the ones that came through saw their businesses change overnight – more borrowers defaulted and more lenders wanted to get their money back as they needed to use their savings. Loan rates went up, but so did bad debt provisions, so the 'target' interest rates for investors went down.

As outlined above, it's crucial to do your research properly before making any decisions about where to move your money to next. 

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