13 replies to this topic

[ASW]

savaroony, on 15 April 2008 - 11:35, said:

What happens if Zopa fails?

In the unlikely event that Zopa goes out of business, we have made a number of arrangements to take care of lenders’ funds:

- Any existing loan agreements you have are made directly between yourself and your borrowers. Zopa does not form part of these contracts, so they remain legally binding and your borrowers will continue to make repayments to you under the terms of your loan agreements with them.
- Your holding account forms part of a segregated bank account at Royal Bank of Scotland to which neither Zopa nor its creditors have any claim. Any funds you have in this account are safe.
- Also in a segregated account to which neither Zopa nor its creditors have any claim, Zopa has deposited funds to cover the cost to lenders of any future collections activity by our credit collections agency. The value of this fund is reviewed monthly and is directly correlated to the total loan repayments outstanding, including those that are not currently in any default status. We have a contractual agreement with this collections agency in which they have agreed to manage any collections activity required in return for these allocated cash reserves. The cost to lenders of collections activity will therefore not vary should Zopa fail.
-       We believe that the lender fee would generate enough funds to run the system to manage repayments. The funds allocated to the collections agency are in addition to this to provide for collections of late repayments.
[edit as slight grammar correction highlighted]

Zopa's reply is fine as far as it goes.  But what would happen if:

  # Zopa financial failure led to its IT system being unable to operate?  How would Zopa generate the information we lenders would need to pursue our individual borrowers?  Is there a plan at Zopa on how it would do this?  Why would an administrator appointed to protect Zopa's creditors want to look after the interests of lenders?

  # Zopa's IT contingency plans failed?  As lenders, our financial risks re our lenders are diversified; but not our risks re Zopa itself.  What cover or assurance do we have, for example, against an insider corrupting Zopa's data?  Or Zopa's standard contract with us or with borrowers turning out to be defective in an unexpected way?

IMHO Lenders depend on the integrity and reliability of Zopa, and the scale of Zopa's operations merits more transparency about how it upholds the standards expected.

[elljay]

ASW, I've moved your post here from the FAQ area.

[figures18]

ASW, on 30 April 2012 - 19:54, said:

snip

I'm not going to answer your specific questions, maybe others will, but as a long term lender you'll know that Zopa failing has been covered numerous times before on the forum.  

I do wonder though, why after your first and only post where you questioned Zopa's integrity you continued to lend. Are you still lending or is your question hypothetical. Did you find your independant financial report on Zopa?  Was it positive or negative?  Two and a half yrs later you're still questioning something which at that time you intimated you were going to resolve once and for all.

ASW, on 14 February 2009 - 23:34, said:

After my first bad debt crystallised, Zopa offered me £50 to refer a friend.  I thought that was surprisingly generous; maybe even suspiciously generous.   Why would Zopa want to attract more customers so badly they are willing to pay so much?  

I am now looking for an independent financial report on Zopa, just to be sure there are no echoes of Madoff or Ponzi at Zopa.

[PoohBah]

[figures18]

figures18, on 30 April 2012 - 20:15, said:

Two and a half yrs later .........

I can't count.  That should have said three and a half yrs later  

[sl75]

figures18, on 30 April 2012 - 21:56, said:

I can't count.  That should have said three and a half yrs later  

Want to try counting again what fraction of a year Feb to April is?

[figures18]

sl75, on 30 April 2012 - 22:00, said:

Want to try counting again what fraction of a year Feb to April is?

3yrs 2months and some bits.  I'm not too sure the months were as relevant as the years were but don't let me stop you from finding fault with my maths  

figures18, on 30 April 2012 - 21:56, said:

I can't count.

Edited by figures18, 30 April 2012 - 22:13.

[chilterncom1]

ASW, on 30 April 2012 - 19:54, said:

Zopa's reply is fine as far as it goes.  But what would happen if:

  # Zopa financial failure led to its IT system being unable to operate?  How would Zopa generate the information we lenders would need to pursue our individual borrowers?  Is there a plan at Zopa on how it would do this?  Why would an administrator appointed to protect Zopa's creditors want to look after the interests of lenders?

  # Zopa's IT contingency plans failed?  As lenders, our financial risks re our lenders are diversified; but not our risks re Zopa itself.  What cover or assurance do we have, for example, against an insider corrupting Zopa's data?  Or Zopa's standard contract with us or with borrowers turning out to be defective in an unexpected way?

IMHO Lenders depend on the integrity and reliability of Zopa, and the scale of Zopa's operations merits more transparency about how it upholds the standards expected.

Financial failure would not in and of itself lead to Zopa's IT systems being unable to operate.  You might like to read Zopa's latest financial statements.

Failure of IT systems is a risk attaching to almost any business nowadays. Like any business, Zopa will have backup copies of its data and of its operating systems and suitable standby facilities.

Would you ask your bank for more transparency about how it "upholds the standards expected" - expected by whom, by the way?

I'm not saying that Zopa's systems are risk-free: no organisation's systems are risk-free and Zopa is after all a smaller entity than most banks.  However, we receive better rates from Zopa lending activity than we do from banks precisely because there is a slightly increased risk for lenders - the risk cited most often being the fact that there is no FSCS cover.

Now, having said all of that, the FAQ answer that you quote is no longer quite accurate, in that the separate fund to which it refers has been phased out since (according to note 11 to the latest financial statements, on which the auditors have issued an unqualified report) future fees would be adequate to fund run-off activity in the event that Zopa itself failed. Over to you, mods  

Edited by chilterncom1, 30 April 2012 - 22:29.

[elljay]

figures18, on 30 April 2012 - 22:03, said:

math

Are you American? *g,d,r*

[figures18]

elljay, on 30 April 2012 - 22:12, said:

Are you American? *g,d,r*

That is insulting. Apologies to any Americans reading this  

I've anglicised my spelling  

Edited by figures18, 30 April 2012 - 22:22.

[MikeS1531]

elljay, on 30 April 2012 - 22:12, said:

*g,d,r*

??? ??? ???

And I did try Googling it, but came up with nothing that seemed to relate even remotely.  

[figures18]

MikeS1531, on 01 May 2012 - 01:07, said:

??? ??? ???

grins, ducks, runs.  You're right, Google in this instance isn't your friend  

[MikeS1531]

figures18, on 01 May 2012 - 07:30, said:

grins, ducks, runs.  You're right, Google in this instance isn't your friend  

Thanks.

[Pedlarjak]

figures18, on 01 May 2012 - 07:30, said:

grins, ducks, runs.  You're right, Google in this instance isn't your friend  

Grins, ducks, runs. Sounds like the England cricket team!