Not upheld: irresponsible lending - inadequate affordability checks complaint against Zopa Bank Limited

Decision detail

Summary

Mr O complained that Zopa lent irresponsibly by failing to conduct adequate affordability checks before approving a £5,000 consolidation loan in May 2025. Mr O argued that Zopa should have identified his gambling addiction and financial vulnerability, which he claimed should have been apparent from his credit file showing financial stress and recent borrowing. The ombudsman found that while Zopa's checks were not reasonable and proportionate due to failure to clarify his actual rental situation, had proper checks been made they would have revealed approximately £1,700 in monthly disposable income, making the lending sustainable. The ombudsman rejected the gambling vulnerability argument because there was no evidence Zopa knew or should have known about the addiction, as it was never disclosed and would not have been visible through the Zopa account or credit file. The complaint was not upheld.

The Ombudsman's reasoning

While Zopa's affordability checks were not reasonable and proportionate because they failed to clarify Mr O's actual rental situation, the ombudsman concluded that proper checks would have revealed sufficient disposable income (approximately £1,700 monthly) to make the lending sustainable. The ombudsman found that ONS modelling data was an acceptable industry standard methodology and that consolidation lending was reasonable given no other negative indicators on the credit file. Critically, Zopa could not have been expected to identify Mr O's gambling vulnerability as it was never disclosed and would not have been visible through the Zopa account or credit file.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website