Not upheld: Irresponsible lending complaint against Zopa Limited

Decision detail

Summary

Miss R complained that Zopa irresponsibly provided her with a credit card in March 2023 (£1,200 limit) and increased it in July 2024 (£1,900 limit) despite knowing she was subject to an IVA and later experiencing missed payments. Zopa and the FOS Investigator did not uphold the complaint, finding the checks proportionate. The ombudsman upheld this decision, finding that Zopa's verification of income and use of statistical data for expenditure were reasonable given the modest credit limits and apparent financial stability, and that the two late payments in 2024 appeared to be one-off events rather than indicators of persistent financial difficulty. The ombudsman also found that persistent debt regulations would not have been triggered as Miss R frequently paid above minimum amounts.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to unaffordable and irresponsible lending, requiring proportionate checks based on the circumstances. For the initial £1,200 credit card, the ombudsman found that Zopa's verification of income through credit reference agencies and use of statistical data for non-discretionary expenditure were reasonable and proportionate given the modest credit limit and the apparent stability of Miss R's finances. Although Zopa knew of defaults coinciding with the IVA, the IVA had started over three years before the application with no recent adverse payment information. For the July 2024 credit limit increase to £1,900, the ombudsman found the two late payments in February and April 2024 appeared to be one-off events given Miss R's overall account management and payment patterns. The new credit limit would still result in modest repayments. The ombudsman also found that persistent debt regulations would not have been triggered as Miss R frequently paid in excess of minimum payments.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website