Not upheld: Irresponsible lending complaint against Zopa Bank Limited

Decision detail

Summary

Mr C complained that Zopa Bank Limited irresponsibly provided him with a £1,200 credit card in 2023. At the time of approval, Zopa's credit checks showed Mr C had £3,300 in unsecured debt, no missed payments, a declared income of £24,780, and no household expenses as he lived with his parents. Mr C later claimed he had actually taken out three loans totalling £7,200 and was regularly £3,000 overdrawn, arguing Zopa should have reviewed his bank statements. The ombudsman rejected this complaint, finding Zopa's checks were reasonable and proportionate, and that Zopa was entitled to rely on credit reference agency information that did not yet reflect the recent loans. The ombudsman concluded there was nothing in the information available to Zopa suggesting Mr C could not sustainably repay the credit card.

The Ombudsman's reasoning

The ombudsman found that Zopa's pre-lending checks were reasonable and proportionate given the £1,200 credit limit. Based on the information available to Zopa at the time (£3,300 unsecured debt, no missed payments, £1,710 net monthly income, no household expenses), Mr C appeared to have sufficient disposable income to afford the repayments. The ombudsman determined that Zopa was entitled to rely on credit reference agency information and was not obliged to review bank statements when the credit checks showed manageable debt levels. The ombudsman rejected the argument that Zopa should have discovered the recent loans and overdraft issues, as these had not yet been reported to the credit reference agency.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website