12 May, 2017

Zopa Is Fully FCA Authorised... Finally

Zopa Is Fully FCA Authorised... Finally

Zopa, the pioneer and founder of peer-to-peer lending (P2P) has been given the green light to offer the Innovative Finance ISA (IF ISA) after the provider was fully authorised by the FCA on Thursday.

In order for a P2P lending platform to offer an IF ISA they must be fully authorised by the City watchdog (FCA) prior to being approved as an ISA plan manager by HMRC. Currently, there are 21 platforms classified as P2P lending that are fully authorised by the FCA. At Orca, we list 14 of these 21 platforms on our 'IF ISA' tracker page, including those that are authorised; those that are HMRC approved; and those that have IF ISAs on the market.

Of the 14 P2P providers authorised by the FCA, three are HMRC plan manager approved and seven have IF ISAs live on the market.

The Zopa announcement carries magnitude as there's been an "elephant in the room" for over a year, ever since the Innovative Finance ISA was launched 6th April 2016 and failed to live up to the hype - only two P2P lending platforms had IF ISAs on the market at the time of launch. A number of smaller platforms have been fully authorised by the FCA since this prestigious date, with Landbay and Lending Works considered the most prominent achieving approval. For all of the "Big Three" (Zopa, RateSetter, Funding Circle) to remain on FCA interim permissions while over a dozen UK providers have received authorisation has bemused investors, commentators and the platforms themselves.

For Zopa, this is the green light for the Innovative Finance ISA, with HMRC ISA approval required before they can launch the tax-efficient wrapper. One important thing to note, for investors, is that Zopa has been queuing new funds onto the platform for a couple of months now, and so it is unlikely that investors will be able to deposit capital let alone hold their Zopa loans in the provider's IF ISA.

Despite this seeming like a double-edged sword - full authorisation but queues for investors - Zopa Chairman Giles Andrews is pleased with the outcome.

We are delighted to receive our full FCA authorisation. Zopa, both individually and as a founder member of the Peer-to-Peer Finance Association (P2PFA), has campaigned for P2P lending to be a regulated activity for a number of years.

With Zopa, RateSetter and Funding Circle accounting for nearly 70% of the UK peer-to-peer lending market by loan volume, it is a huge stamp for the industry that one of the leading platforms has achieved full authorisation. Investors will be buoyed by this announcement, but it may count for little if investors remain queued and can't utilise the tax-wrapper.