Not upheld: Irresponsible lending complaint against Zopa Bank Limited

Decision detail

Summary

Mrs R complained that Zopa acted irresponsibly by approving two personal loans (£2,000 and £20,000) in April 2024 when she was gambling compulsively and harmfully, and that the loan proceeds were used to fund her gambling addiction. Zopa conducted proportionate affordability checks including salary verification, credit file review, and ONS-based outgoings estimates, which showed Mrs R had stable income, well-maintained existing debt with no arrears, and that the loans would be affordable. The ombudsman found that Zopa's checks were reasonable and proportionate, and there was no evidence available to the firm at the time that would have indicated gambling-related harm or that the loans would be unaffordable. The complaint was not upheld, though the ombudsman recommended that Zopa provide forbearance and support to Mrs R now that it is aware of her vulnerability.

The Ombudsman's reasoning

The ombudsman found that Zopa's checks were proportionate and reasonable for the type and amount of credit being provided. There were no fixed set of questions lenders must ask, and the checks should vary depending on the type of credit, term, and existing commitments. At the time of both applications, the information available to Zopa indicated the loans would be affordable and sustainable. While bank statements would have revealed the gambling, there is no obligation on lenders to specifically request bank statements, and the only way Zopa would have known was if Mrs R had disclosed the information directly. The additional loans taken with other lenders were not yet visible on her credit file, so Zopa could not have been expected to question them. The ombudsman acknowledged Mrs R's harm but concluded that Zopa could not reasonably have foreseen that the loan funds would be used for gambling or that this would occur.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website