Upheld: irresponsible lending complaint against Zopa Bank Limited
Financial Ombudsman decision DRN-6390647 of 2026-05-28T00:00:00+00:00. irresponsible lending complaint against Zopa Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6390647 |
|---|---|
| Decision date | 2026-05-28T00:00:00+00:00 |
| Firm | Zopa Bank Limited |
| Product | loan |
| Claim type | irresponsible lending |
| Outcome | Upheld |
| Remedy | Zopa must: (1) Add up total repayments Mr C has made and deduct from the total amount borrowed; (2) If Mr C overpaid, refund overpayments with 8% simple interest from date of overpayment until settlement; (3) Remove all adverse information regarding the account from Mr C's credit file; (4) If capital balance remains outstanding, arrange an affordable and suitable payment plan with Mr C, and remove adverse information from credit file once cleared. |
Summary
Mr C complained that Zopa acted irresponsibly by lending him £30,000 in February 2024 for debt consolidation when the loan was unaffordable. Zopa verified his income at £3,179 monthly net and estimated his living costs at £725 monthly based on ONS data, finding disposable income of £240 after existing credit commitments. However, the ombudsman found that given the loan size, 60-month duration, and Mr C's high existing indebtedness of £44,507, Zopa should have conducted manual checks into actual expenses rather than relying on estimates. Using actual spending data of £618 monthly, Mr C would have negative disposable income of -£380 after the new loan repayments, and Zopa could not reasonably assume sufficient debt consolidation would occur to offset this. The ombudsman upheld the complaint and ordered Zopa to refund interest and charges, remove adverse credit file information, and arrange an affordable repayment plan for any remaining capital.
The Ombudsman's reasoning
The ombudsman found that while Zopa completed some checks, they were not proportionate to the circumstances. Given the loan size (£30,000), duration (60 months), and Mr C's high level of existing indebtedness (£44,507), Zopa should have conducted manual checks into actual expenses rather than relying on ONS estimates. The ombudsman calculated that even using Zopa's verified income figure and the lower actual essential spending of £618, Mr C would have negative disposable income of -£380 after loan repayments if the loan was not used for consolidation. While debt consolidation was stated as the purpose, there was nothing in the loan agreement requiring this use, and Zopa could not reasonably assume sufficient consolidation would occur to make the lending sustainable. Therefore, proportionate checks would not have shown the lending to be affordable or sustainable.
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