Partially upheld: irresponsible lending - inadequate affordability assessment and failure to act on concerning financial indicators complaint against Zopa Bank Limited
Financial Ombudsman decision DRN-6366039 of 2026-05-27T00:00:00+00:00. irresponsible lending - inadequate affordability assessment and failure to act on concerning financial indicators complaint against Zopa Bank Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6366039 |
|---|---|
| Decision date | 2026-05-27T00:00:00+00:00 |
| Firm | Zopa Bank Limited |
| Product | personal loan |
| Claim type | irresponsible lending - inadequate affordability assessment and failure to act on concerning financial indicators |
| Outcome | Partially upheld |
| Remedy | Zopa must: (1) remove all interest and charges on Loans 3 and 4 and treat all payments as capital repayment; (2) refund any overpayments with 8% simple interest from date overpayment arose; (3) if capital remains outstanding, take sympathetic view on affordable repayment plan; (4) remove adverse credit file information on Loans 3 and 4 once capital is fully repaid. Zopa must either take debts back into its own books or liaise with third party debt holder to implement these directions. |
Summary
Mr W complained that Zopa lent irresponsibly by providing three loans (Loans 2, 3, and 4) without adequate affordability assessments. The ombudsman found Loan 2 was responsibly lent based on proportionate checks showing affordability. However, for Loan 3, although Zopa obtained bank statements, it failed to properly assess the concerning evidence of uncontrolled gambling (£7,500+ cash withdrawals, £5,000 casino payments) and unsustainable debt repayment patterns (£8,000+ monthly credit repayments). Similarly, Loan 4 should have been declined as the same concerning pattern persisted eight months later. The ombudsman upheld the complaint and directed Zopa to remove all interest and charges on Loans 3 and 4, treat payments as capital only, refund overpayments with interest, and remove adverse credit file entries.
The Ombudsman's reasoning
The ombudsman found that while Zopa's checks before Loans 2 and 3 were proportionate in scope, the results of those checks should have led to different conclusions. For Loan 3, the bank statements Zopa obtained showed evidence of uncontrolled gambling spending (large cash withdrawals and casino payments) alongside substantial credit repayments, indicating Mr W lacked genuine disposable income and was relying on gambling success to service debt. This was unsustainable. For Loan 4, applied just eight months later while Loan 3 was still being repaid, Zopa should have independently verified Mr W's finances again and would have found the same concerning pattern, warranting decline. The ombudsman rejected Zopa's argument that debt reduction demonstrated financial stability, as the repayments were funded by gambling rather than sustainable income.
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