Not upheld: irresponsible lending and unaffordability complaint against Zopa Bank Limited

Decision detail

Summary

Miss J complained that Zopa Bank irresponsibly lent her £10,000 in November 2021 when she already had significant debts and could not afford further borrowing. Zopa Bank obtained Miss J's income details, cross-checked them against bank account information, and conducted a credit search showing no adverse information and relatively well-maintained existing commitments. The loan was stated to be for debt consolidation purposes. The ombudsman found that Zopa Bank's checks were proportionate for a first lending relationship and that the consolidation purpose meant the loan should have improved Miss J's financial position. The complaint was not upheld as the ombudsman was satisfied Zopa Bank did not lend irresponsibly.

The Ombudsman's reasoning

The ombudsman found that Zopa Bank obtained a reasonable amount of information before approving the loan, including income verification and credit checks. The loan purpose was debt consolidation, which meant the proceeds should have cleared most existing debts, improving Miss J's financial position. As this was a first loan, Zopa Bank had no reason to believe Miss J would reestablish balances on cleared accounts. Even if Zopa Bank had obtained more detailed information about living expenses, this would not have changed the lending decision given the consolidation purpose.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website