Upheld: irresponsible lending - unaffordable loan due to underestimated housing costs complaint against Zopa Bank Limited
Financial Ombudsman decision DRN-6302641 of 2026-04-28T00:00:00+00:00. irresponsible lending - unaffordable loan due to underestimated housing costs complaint against Zopa Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6302641 |
|---|---|
| Decision date | 2026-04-28T00:00:00+00:00 |
| Firm | Zopa Bank Limited |
| Product | personal loan |
| Claim type | irresponsible lending - unaffordable loan due to underestimated housing costs |
| Outcome | Upheld |
| Remedy | Zopa must: (1) calculate total repayments made by Mrs C and deduct from total amount received; (2) refund any overpayment with 8% simple interest from date of overpayment; (3) if capital balance remains, work with Mrs C to agree an affordable repayment plan; (4) remove all adverse information from Mrs C's credit file once any sum due is paid. |
Summary
Mrs C complained that Zopa lent to her irresponsibly by providing a £20,000 personal loan in July 2024 without conducting sufficient affordability checks. Zopa assessed the loan as affordable based on calculations showing sufficient disposable income after accounting for housing costs of £320.25, existing credit commitments, and essential expenditure. The ombudsman upheld the complaint, finding that while Zopa's checks were reasonable in scope, the lending decision was unfair because the firm underestimated Mrs C's actual housing costs (£640.50 per bureau data or £400 as declared), which would have left her with no or insufficient disposable income to meet loan repayments. Zopa was ordered to refund overpayments with interest, arrange an affordable repayment plan for any remaining balance, and remove adverse credit file information.
The Ombudsman's reasoning
While Zopa's checks were reasonable and proportionate in scope, the lending decision was unfair because the firm underestimated Mrs C's housing costs. Using the bureau mortgage data showing £640.50 monthly housing costs (or alternatively Mrs C's declared £400), combined with existing credit commitments of £1,028.90 and essential expenditure of £784, Mrs C would have had no or insufficient disposable income remaining after loan repayments. The purpose of debt consolidation does not justify lending that is not sustainably affordable without such consolidation occurring.
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