Investments 

P2P lender unveils product details ahead of Isa launch

P2P lender unveils product details ahead of Isa launch

Peer-to-peer platform Zopa is to launch a range of lending products ahead of the introduction of the Innovative Finance Isa in April.

Three new products, which aim to offer more flexibility, will be launched in mid-March to replace its existing offering.

News emerged last week that Zopa was looking at launching a new offering in April but was to offer the same rates as the lender’s standard products.

Fresh lending options include the Zopa Access, Zopa Classic and Zopa Plus, all of which will be offered with Isa wrappers.

Zopa AccessZopa Classic Zopa Plus
Safeguard lendingYesYesNo
ReturnsAround 3-4 per cent after expected defaultsAround 4-5 per cent after expected defaultsAround 6-7 per cent after expected defaults
AccessNo fee to see loans1 per cent fee to see loans1 per cent fee to sell loans
Isa eligibleYes YesYes

Andrew Lawson, chief product officer of Zopa, said: “Zopa’s new products are designed to provide more choice for our customers, whether they are seasoned Zopa lenders or new to peer-to-peer lending.

“We’ve listened carefully to feedback from our customers to create a range of products we believe will deliver the right balance of returns, risk and access.

“Even more exciting is that we’ll be able to offer all three products within an Isa, which will help UK consumers get even more value from their hard-earned money.”

Mr Lawson reckons Zopa Plus could deliver returns of 6 per cent to 7 per cent and said this would be “extremely competitive” based on the level of risk lenders choose to take.

Zopa Plus targets customers who are comfortable to lend their money through the lender’s ‘diversification model’ and do not require the additional security of safeguard.

Specific rates for each product will be announced on 1 March.

Darius McDermott, managing director at Chelsea Financial Services: “On the face of it looks a sensible product range with scaled up risk. There is a level safeguarding on some, but it’s worth noting that it isn’t guaranteed.

“Zopa are pretty transparent about everything on their website, but I would like more detail on the credit quality of the underlying borrowers for each. Also the 1 per cent access charge is quite high.

Mr McDermott also pointed out that P2P is a very immature industry, with a short track record, and it is not certain what the impact will be on rising interest rates will be.

“It’s not an imminent problem though and why they will be attractive to investors looking for income. The Isa wrapper makes them even more attractive.”

Earlier this month, Ratesetter released details of its Innovative Finance Isa offering.

The P2P Isa the go-ahead in July last year.

katherine.denham@ft.com