Not upheld: unfair treatment in arrears management and inadequate communication regarding consequences of reduced repayment plans complaint against Zopa Bank Limited

Decision detail

Summary

Mr K complained that Zopa gave incorrect information about what would happen following reduced repayment plans and subsequently registered a default without fair process. After obtaining a £9,850 personal loan in July 2023, Mr K requested reduced repayments of £150 per month starting in January 2025 due to financial difficulty, with two further reduced repayment plans arranged in April and July 2025. Zopa issued a Notice of Default in July 2025 and the account defaulted in August 2025 when Mr K was three months in arrears. The ombudsman found that while Zopa could have been clearer about post-plan procedures, Mr K could not have avoided default as he could not afford to resume contractual repayments or pay arrears, and the default was registered in line with ICO guidance.

The Ombudsman's reasoning

The ombudsman acknowledged that Zopa could have been clearer about what would happen after the reduced repayment plans ended and that Mr K was led to believe there would be a conversation before default. However, the ombudsman found that Mr K had confirmed he would not have been able to resume contractual repayments or pay down arrears at the time of default. Since Mr K's financial situation was not temporary and Zopa had already declined to offer further reduced repayment plans, the outcome would have been the same even if Zopa had contacted Mr K before defaulting. The default was registered in line with ICO guidance recommending defaults after three to six months of arrears.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website