The original peer-to-peer lender has been in business since 2005, but it now says it plans to focus on its growing bank and credit card business.

Zopa gained a full banking licence last year and now offers savings accounts and credit cards, as well as offering energy and broadband switching.

Zopa CEO Jaidev Janardana announced the news in a blog post about the future of Zopa’s business.

The blog post said: “After 16 years of peer-to-peer (P2P) investments at Zopa, we have taken the decision to close our retail investing business. This has been a tough decision, and not one we have taken lightly.

“We deliberated several options for how to close the P2P side of our business in a way that delivers the best outcome for our customers. After careful consideration, we have decided that the best way forward is the sale of all retail investor portfolios at full value. This will lock in the interest earned by investors so far and ensure the timely return of their money.

“To make this as smooth as possible, Zopa Bank will be buying the P2P loan portfolio and P2P customers will receive their investment balances back by the end of January.”

Zopa said it had delivered positive returns to its investors for 16 consecutive years, with an average return of 5%. However, it said that over the past few years, customer trust in P2P investing had ‘been damaged by a small number of businesses whose approach led to material losses for retail investors’.

It also pointed to changing regulation which has raised the operational costs of running a P2P business, as well as the cost of attracting new investors to the Zopa platform. It said that to offset these increased costs and ensure it had a sustainable and profitable business, it would need to reduce investor returns to a point where they’d no longer be attractive to investors.

What to do if you’re a Zopa investor

By 31 January 2022 all Zopa investors will receive the full value of their invested balances in their Zopa holding accounts. This means that no investor will miss out on any of the interest they’ve already built up.

There won’t be an impact on borrowers as Zopa Bank already services them and their loans will continue unimpacted.