Not upheld: Credit file / adverse marker disputes complaint against Zopa Bank Limited

Decision detail

Summary

Mrs F complained that Zopa Bank Limited unfairly defaulted her personal loan and reported it to credit reference agencies, and subsequently sold the debt while she was engaging with the firm about her finances. Mrs F had entered into a reduced payment arrangement in August 2025 after experiencing a reduction in household income, but had not made contractual payments for five consecutive months prior to that. Zopa issued a Default Notice in August 2025 and defaulted the loan in September 2025, then sold the debt in November 2025. The ombudsman found that the default was justified under ICO guidance and the loan agreement terms, and that Mrs F would not have been able to clear the arrears balance of £2,100 by the deadline even if she had been informed of the default notice. The ombudsman upheld Zopa's offer of £100 compensation for poor customer service but rejected Mrs F's complaint regarding the default and debt sale.

The Ombudsman's reasoning

The ombudsman found that Zopa's default was justified because Mrs F had not made contractual payments for five consecutive months, and the default was issued in line with ICO guidance which permits defaults when accounts are three months in arrears and normally no later than six months in arrears. The Default Notice clearly set out the required action and consequences. Although Zopa's representatives could have mentioned the default notice during the August 2025 phone call, the ombudsman found that Mrs F would not have been able to clear the arrears balance of £2,100 by early September 2025 given her financial circumstances and reduced income. The ombudsman also found that Zopa's sale of the debt to a third party was not unreasonable and was permitted under the loan agreement terms. The £100 compensation for poor customer service was deemed appropriate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website