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

Decision detail

Summary

Mrs M complained that Zopa lent irresponsibly by failing to conduct adequate affordability checks when issuing a credit builder credit card with a £600 limit in April 2024 and subsequently increasing it to £1,300 in January 2025. Mrs M argued that Zopa should have identified her previous defaults and struggling finances from small payments made to the card. The ombudsman found that Zopa's checks were proportionate to the lending offered, considering the credit builder product nature, the low initial limit, validated income of £42,000, and eight months of positive account management data showing no missed payments. The ombudsman's own affordability calculations confirmed sufficient disposable income for sustainable repayments, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Zopa's checks were proportionate to the lending offered. For account opening, the low £600 credit limit, the nature of a credit builder product (which typically serves applicants with challenging histories), and the wider scope of credit file data made the checks sufficient. The credit file showed previous defaults but not ongoing financial distress. For the credit limit increase, while more significant, Zopa reasonably relied on the earlier assessment supplemented with revised credit file data and eight months of positive account management information. The ombudsman's own affordability calculations confirmed disposable income was sufficient for sustainable repayments in both scenarios. The use of ONS data modelling is accepted industry practice and there was nothing to suggest Mrs M would not be fairly represented by such data.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website