Not upheld: default registration and credit file reporting complaint against Zopa Bank Limited

Decision detail

Summary

Miss H complained that Zopa Bank Limited refused to remove a default from her credit file for an unsecured personal loan, which was causing her serious difficulties obtaining housing. Miss H had fallen into arrears, engaged a debt management company, and agreed reduced payment arrangements with Zopa, but ultimately accrued seven months of arrears before paying off the loan in full. Zopa registered the default when Miss H was four months in arrears, in line with ICO guidance. The ombudsman found that Zopa had acted fairly by providing clear communication about the arrears and default, offering support, and accurately reporting the default in accordance with regulatory obligations. Although Miss H was later diagnosed with ADHD and her circumstances were difficult, the ombudsman found no unfairness in Zopa's actions and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Zopa had regulatory obligations under the Consumer Credit Act 1974, FCA rules, and ICO guidance to report accurate credit information. Zopa provided fair communication about arrears and the default, offered support through debt management liaison and payment arrangements, and registered the default in line with ICO expectations (at four months arrears). Although Miss H's circumstances were difficult, the ombudsman could only require Zopa to act differently if they had acted unfairly. Since the default was accurately registered and Zopa met their legal and regulatory obligations, the ombudsman found no unfairness. The ombudsman rejected the argument that reporting arrears instead of a default would be preferable, noting that six months of arrears would generally indicate default status anyway and would negatively impact the credit file for longer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website