Zopa the latest P2P lender to reveal ISA plans

As reported earlier this week, Ratesetter became the first P2P lender to unveil its Innovative Finance (IF) ISA rates. Yesterday another P2P lender, Zopa, revealed information regarding its own IF ISA, confirming that it will be available from 6 April, and will offer the same rates as its standard products, with no additional fees or charges. Zopa also announced that the IF ISA will be flexible, allowing customers to withdraw funds without impacting the annual limit, and that customers will be able to transfer their tax free savings allowance over to an IF ISA. Zopa, which has lent £1.3bn since it was founded in 2005, is also working on a new range of products that it expects to launch ahead of the IF ISA.

The godfather of peer to peer lending Zopa, has published some information on the forthcoming Innovative Finance ISA. The long awaited update to ISAs will finally take place this coming April. At that time, savers will be able to add P2P / marketplace lending assets to their retirement portfolios. The UK P2P industry views this event as a benchmark shift as the process of matching investors with borrowers online becomes the preferred process and not an interesting novelty. Investing in P2P loans may provide a higher risk-adjusted return. This is an important differentiator in a historically low-interest rate environment. If you keep a lot of money in your bank savings account you earn little or no interest. Set up an account with a P2P lender and you have the potential to generate a much higher rate of return. Of course, your capital is at risk and P2P assets are not covered by the Financial Services Compensation Scheme, but many industry observers believe the offer for savers will be compelling enough to drive the industry much higher. Saving money tax-free is a big thing.

Andrew Lawson, Chief Product Officer at Zopa, the manager who is leading the IF ISA charge on the Zopa team, recently stated;

“We anticipate a lot of interest in Zopa’s Innovative Finance ISA when it launches from April. Many of our customers have long expressed an interest and desire to put their peer-to-peer lending into an ISA and enjoy the tax benefits. We also expect that the IF ISA will be further catalyst for driving awareness of the P2P sector, and help more UK consumers earn more interest from their money.”

Zopa, along with many other peer to peer lending platforms, will be facilitating IF ISA investors. Zopa is currently working on receiving FCA approval to participate in the new ISA wrapper. They expect their platform to be licensed in the coming weeks. The online lender has provided some insight into what to expect from the largest P2P lender in the UK today;