Not upheld: irresponsible lending - inadequate affordability checks complaint against Zopa Bank Limited

Decision detail

Summary

Mrs M complained that Zopa lent to her irresponsibly by failing to carry out sufficient affordability checks before approving a £1,000 loan in November 2024. Mrs M argued that Zopa should have discovered her previous defaults and debt management plan, and should have reviewed her current account records rather than relying on ONS modelling. The ombudsman found that Zopa's checks were reasonable and proportionate, noting the 22-month gap since the last default and evidence of payments towards reducing default balances. The ombudsman rejected the argument that more intrusive checks were necessary and found the affordability assessment showing over £800 monthly disposable income supported the lending decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Zopa's checks were reasonable and proportionate for a £1,000 loan. The 22-month gap since the last default, combined with evidence of payments being made to reduce default balances, suggested the defaults were historic and not necessarily reflective of Mrs M's current financial position. The ombudsman rejected the argument that current account records should have been reviewed, finding this level of intrusive checking unnecessary and disproportionate for the loan amount. The ombudsman also found that ONS data modelling was a reasonable approach under CONC 5.2A.17, which allows for reasonable estimates. The affordability assessment showing disposable income in excess of £800 per month supported the lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website