This morning in my in-box, a message from Zopa awaited me.
Quelle surprise!, since for all intents and purposes my relationship with Zopa has been severed when they withdrew from the US market and transferred my money to USA Fed Credit Union.
Anyway, the letter mentions "changes in legislation" that may affect how 3rd party debt buyers may buy and/or pursue debts. As I'm typing this, I wonder if this might perhaps be applicable to the UK debt market, and they have gotten their email lists messed up or I might have signed up for something in the early days when we we eagerly awaiting the arrival of Zopa in the US.
Anyway, here is the text of the letter, which makes for an interesting read.
Changes to debt purchases
Changes to legislation mean that, with their current licenses, CRS can no longer purchase a debt in order to pursue it. However, they are still licensed to pursue a borrower on behalf of a third party.
What does this mean?
CRS will continue to act on your behalf when a borrower has fallen into arrears, but is not yet in default. Once a borrower does fall into default, CRS can no longer purchase the loan from you. You will therefore no longer be offered 10% of the amount outstanding for the transfer of right and title in such a loan.
What are we doing about it?
We have created a new and independent company named P2PS Limited. This business is governed independently of Zopa Limited and will be non-profit-making. For some loans that have already fallen into default that CRS have been unable to purchase and for loans falling into default hereafter, you will be asked to assign your title right and interest to P2PS Limited, instead of CRS.
You will not be offered any financial consideration for this assignment, but please see our comments below in relation to sums recovered.
As with the current process, you will still have 28 days within which you can opt out of this should you wish to pursue your part of the debt independently. Once P2PS Limited has been assigned with the right and title to a debt, it will then pursue the borrower for repayment, and a County Court Judgement or Bankruptcy where applicable. Whenever any funds are successfully reclaimed from the borrower, P2PS will apportion funds appropriately to the original lenders of that loan (excluding any that opted out) after deducting P2PS Limited’s costs.
It is always regrettable to change terms and conditions, but we hope you understand that this change has been brought about by events outside of our control and that we have investigated all potential options before setting up the most effective alternative. We also apologise for not making you aware of this sooner; P2PS required licenses from the OFT and the process to acquire them took far longer than expected.
We have changed the Zopa Principles to reflect these changes.
Why can’t Zopa pursue the debt on my behalf?
Zopa has a contractual relationship with both borrowers and lenders, as members of the Zopa Platform. Therefore, Zopa could be placed in a position where there is a potential conflict of interest if it pursued one member on behalf of another.
Further Questions
Should you have any questions, please post them on this thread on the forum so that we might efficiently collate and address your concerns.
Best wishes
The Zopa Team
