The UK’s oldest peer-to-peer service is warning investors that defaults on its recent loans will be running at a higher rate than during the financial crisis.
Peer-to-peer investing offers a trade off to investors: if they lend money directly to riskier borrowers, they can get a high rate of return on their cash. But Zopa, the dominant peer-to-peer lender in the UK consumer market with £3bn of lending, is anticipating falling investor returns despite increasing its volume of high-risk loans. When the company was launched in 2005, it matched lenders with low-risk borrowers and offered a safety net in the form of a provision fund which paid out to investors in the event of a loan defaulting.
https://www.ft.com/content/c749ba88-16f6-11e8-9376-4a6390addb44
