Not upheld: Credit file / adverse marker disputes complaint against Zopa Bank Limited

Decision detail

Summary

Mr S complained that Zopa unfairly recorded a default on a £35,000 loan after he reported temporary liquidity difficulties in September 2025. He argued that Zopa issued a Notice of Default only two working days after sending him an Income and Expenditure form, without giving reasonable time to provide information or agree a repayment plan, and that this breached FCA forbearance rules and principles of fair treatment. The ombudsman found that although Mr S was engaging with Zopa, the account had been in arrears for over three months and Mr S had failed to meet multiple promises to pay. The ombudsman determined that Mr S's financial situation showed he could not afford to resume contractual repayments or clear arrears within a reasonable timeframe, as evidenced by his monthly deficit and subsequent defaults on other loans. The complaint was not upheld as the default was recorded in line with ICO guidelines and Zopa had shown appropriate forbearance.

The Ombudsman's reasoning

The ombudsman found that although Mr S was in contact with Zopa and attempting to work on a solution, the account had been in arrears for over three months by the time of default, which aligns with ICO guidance recommending defaults be registered once arrears reach three months. Critically, the ombudsman determined that Mr S was unable to resume contractual repayments or clear arrears within a reasonable timeframe, as evidenced by his monthly deficit of £216 shown in his I&E, his failure to make promised payments, and his subsequent default on two other loans by December 2025. The ombudsman rejected the argument that the relationship had not broken down, interpreting the ICO guidance to mean that a default can be appropriate even when lender and borrower remain in contact if the borrower cannot pay. The ombudsman also found that Zopa showed appropriate forbearance through its actions and that it was not obliged to halt default proceedings while a complaint was under review.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website