Not upheld: irresponsible lending complaint against Zopa Bank Limited

Decision detail

Summary

Mr W complained that Zopa Bank Limited irresponsibly lent to him when approving a £900 credit card in October 2022. Mr W argued that Zopa should have reviewed his bank statements through open banking, which would have shown financial strain including payments to debt collection agencies and payday loan clearances. Another lender had upheld a similar complaint for an account opened slightly before the Zopa card. The ombudsman found that Zopa's proportionate checks, including CRA reports showing no recent adverse credit information or arrears, were sufficient for this lending decision and that further checks were not required. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Zopa's checks were proportionate for a £900 credit limit decision. The CRA checks showed Mr W had no recent adverse credit information, no current or recent arrears, and appeared to be managing existing debt well. The ombudsman reasoned that proportionate checks do not require lenders to use open banking or request bank statements when there are no signs of financial difficulty or contradictory information. The affordability assessment suggested Mr W could afford sustainable repayments. While Mr W had past defaults, this does not automatically preclude lending. The ombudsman distinguished this case from the other lender's upheld complaint, noting that each lending decision must be judged on its own merits with potentially different checks and risk appetites.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website