Peer-to-peer lending: Zopa reopens to new investors

Zopa is the first peer-to-peer lender to get a banking license - but does that make it any better for investors or borrowers?

Zopa has become the first peer-to-peer lender to be given a UK banking license.

It is the first peer-to-peer lender to do so, 14 years after it was founded in 2005.

Having a banking license paves the way for Zopa to roll out savings products and credit cards.

Investors should be aware, however, that having a banking license doesn't mean their money is protected by the Financial Services Compensation Scheme.

As with other investments, you should make sure you understand the risks.

This article is part of a wider series on investing, covering all areas from stocks and shares to buy-to-let, peer-to-peer and alternative investments. Click here to view the full guide.

What can you invest in?

Zopa offers two Innovative Finance ISAs (IFISAs). which let you invest up to £20,000 per tax year and the growth is tax-free. 

Remember, with peer-to-peer you are lending your money to others so there is a chance they could default on their repayments and you could lose some of your money.

But, Zopa spreads your money across a large number of loans in order to keep the risk of a loss to a minimum.

There is a minimum investment of £1,000 across all four products.