Upheld: irresponsible lending - inadequate affordability checks complaint against Zopa Bank Limited
Financial Ombudsman decision DRN-6279220 of 2026-04-27T00:00:00+00:00. irresponsible lending - inadequate affordability checks complaint against Zopa Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6279220 |
|---|---|
| Decision date | 2026-04-27T00:00:00+00:00 |
| Firm | Zopa Bank Limited |
| Product | personal loan |
| Claim type | irresponsible lending - inadequate affordability checks |
| Outcome | Upheld |
| Remedy | Zopa Bank Limited must: (1) rework all three loan accounts removing all interest, fees and charges; (2) if a credit balance results, refund it to Miss C with 8% simple interest per year from date of overpayment to settlement; (3) remove all adverse information regarding these accounts from Miss C's credit file; (4) if an outstanding balance remains after rework, arrange an affordable repayment plan with Miss C; (5) once the balance is cleared, remove any adverse information from Miss C's credit file. |
Summary
Miss C complained that Zopa approved three loans (£5,000 in May 2023, £15,000 in February 2024, and £15,000 in November 2024) without conducting sufficiently thorough affordability checks. The ombudsman found that all three loans showed negative net disposable income when calculated pre-consolidation, and that Miss C's external debt increased from £30,020 to £54,192 across the lending period despite the stated consolidation purpose. Bank statements revealed returned direct debits and overdraft reliance that Zopa should have investigated. The ombudsman upheld the complaint and ordered Zopa to remove all interest, fees and charges from the loans, refund any credit balance with interest, and remove adverse credit file entries.
The Ombudsman's reasoning
The ombudsman found that all three loans showed negative net disposable income when calculated on a pre-consolidation basis, contrary to Zopa's stated lending principle. Although Zopa argued consolidation savings would make loans affordable, these were retrospective calculations not imposed as conditions of lending. Critically, Miss C's external debt increased rather than decreased after each consolidation loan, which should have prompted Zopa to conduct further due diligence. The ombudsman concluded that had Zopa reviewed bank statements, it would have discovered returned direct debits and overdraft reliance, likely leading to a different lending decision. The pattern of increasing debt across loans 2 and 3 should have raised red flags given the stated consolidation purpose.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Zopa Bank Limited, all decisions | 558 | 27% |
Source
Read the original decision on the Financial Ombudsman Service website