Not upheld: Investment mis-selling complaint against Zopa Limited

Decision detail

Summary

Mr L invested in Zopa's P2P lending platform for several years. When Zopa closed its platform in December 2021, it offered to acquire investors' loan portfolios at face value but would not pay for loans already in default. Mr L received £46,303 for his portfolio, including £2,633 for loans in arrears, but received nothing for defaulted loans valued at £1,373. Mr L complained that this was unfair and that he should be compensated for the loss. The ombudsman found that Zopa's approach was reasonable given the limited recovery prospects for defaulted loans and the generous treatment of loans in arrears, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman accepted that defaulted loans had limited recovery prospects and were not suitable for third-party sale, supporting a zero valuation. However, the ombudsman weighed this against Zopa's decision to pay full capital value for loans in arrears (£2,633), which was nearly double the notional value of defaulted loans (£1,373). This generous treatment of arrears loans, combined with the guaranteed return of capital on non-defaulted loans, was considered fair compensation overall. The ombudsman also found that Zopa's wind-down plan was indicative rather than prescriptive, and that the early completion of the loan acquisition (early January rather than 31 January 2022) did not constitute unfair treatment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website