Partially upheld: irresponsible lending - failure to conduct adequate affordability and sustainability checks complaint against Zopa Bank Limited
Financial Ombudsman decision DRN-6338717 of 2026-05-06T00:00:00+00:00. irresponsible lending - failure to conduct adequate affordability and sustainability checks complaint against Zopa Bank Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6338717 |
|---|---|
| Decision date | 2026-05-06T00:00:00+00:00 |
| Firm | Zopa Bank Limited |
| Product | unsecured personal loan |
| Claim type | irresponsible lending - failure to conduct adequate affordability and sustainability checks |
| Outcome | Partially upheld |
| Remedy | Zopa Bank Limited must: (a) refund all interest, fees and charges paid by Mr M on loans 3, 4, 5, and 6; (b) pay 8% simple interest on individual repayments made by Mr M (calculated from date of payment to settlement date); (c) remove any adverse information recorded on Mr M's credit file relating to all four loans (3-6); (d) provide a tax certificate if requested. |
Summary
Mr M complained that Zopa irresponsibly approved six unsecured personal loans between September 2022 and June 2025 without conducting adequate affordability checks. The ombudsman found that while the first two loans were appropriately approved based on available information, by the third loan application in March 2024, Mr M was showing clear signs of financial vulnerability through rapid borrowing from multiple lenders and a £40,000 secured loan taken within weeks. The ombudsman determined that Zopa should have conducted more thorough checks, including reviewing bank statements, which would have revealed harmful gambling spending patterns (£10,700-£15,200 between loan applications) demonstrating unsustainability. Consequently, loans 3-6 should not have been approved. The ombudsman ordered Zopa to refund all interest, fees and charges on loans 3-6, pay 8% simple interest on repayments, and remove adverse credit file information.
The Ombudsman's reasoning
The ombudsman found that while loans 1 and 2 were appropriately approved based on available information at the time, by the third loan application in March 2024, Mr M was displaying clear signs of financial vulnerability and over-dependence on credit. The ombudsman reasoned that Zopa should have conducted more thorough checks, particularly bank statement reviews, when Mr M applied for multiple large loans from different lenders within short timeframes and took a £40,000 secured loan within weeks of applying for the third loan. Had Zopa done so, it would have discovered harmful gambling spending patterns (exceeding £10,700-£15,200 between loan applications) that demonstrated the lending was unsustainable. The ombudsman concluded that the pattern of borrowing from multiple lenders in quick succession, combined with the gambling evidence, meant loans 3-6 should not have been approved as they were not sustainable for Mr M.
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