Not upheld: irresponsible lending and loan affordability complaint against Zopa Bank Limited

Decision detail

Summary

Mr K complained that Zopa lent to him irresponsibly in September 2023 when he received an £8,000 loan at 16.9% APR with £225.49 monthly repayments, claiming the loan was unaffordable given his financial circumstances. An FOS Investigator initially recommended upholding the complaint, finding Zopa had not conducted reasonable and proportionate affordability checks. However, the ombudsman disagreed, finding that Zopa's checks—including income validation through CRA data, assessment of existing commitments, and statistical expenditure data—were reasonable and proportionate, and showed Mr K had sufficient disposable income to afford the loan. The ombudsman also found no evidence that Zopa should have been aware of Mr K's financial stress at the time of the September 2023 lending decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied FCA CONC guidance on responsible lending and found that Zopa's affordability checks were reasonable and proportionate given the loan amount, type, and cost. The checks included validation of declared income through CRA data, assessment of existing credit commitments, calculation of essential expenditure using statistical data, and a credit check. Based on these checks, Mr K appeared to have sufficient disposable income (approximately £87.35 monthly after all commitments) to afford the £225.49 monthly repayment. The ombudsman noted that lenders have discretion in how they conduct checks and that full evidence of expenditure is not required in every case. The ombudsman also found no reason to believe Zopa should have been aware of Mr K's financial stress at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website