Upheld: Irresponsible lending complaint against Zopa Bank Limited
Financial Ombudsman decision DRN-6477725 of 2026-07-07T00:00:00+00:00. Irresponsible lending complaint against Zopa Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6477725 |
|---|---|
| Decision date | 2026-07-07T00:00:00+00:00 |
| Firm | Zopa Bank Limited |
| Product | Personal loan |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | Zopa must: (1) calculate total repayments made by Miss W and deduct from amount received; (2) if overpaid, refund with simple interest at Bank of England base rate plus 1% from date of overpayment; (3) if capital balance remains, arrange affordable and sustainable repayment plan; (4) once cleared, remove adverse information from credit file. |
Summary
Miss W complained that Zopa irresponsibly lent her £15,000 in June 2023 without conducting adequate affordability checks. Zopa verified her income at £23,000 annually and estimated essential spending at £725 monthly, but failed to account for her housing costs despite her declaring she was renting. The ombudsman found that after accounting for the new loan repayment of £478.80 and remaining credit commitments of approximately £302.10, Miss W would have only £121.77 monthly remaining for housing and emergencies, making the loan unaffordable. The complaint was upheld and Zopa was directed to refund overpayments with interest, arrange a sustainable repayment plan for any remaining balance, and remove adverse credit file information.
The Ombudsman's reasoning
Zopa's affordability assessment was incomplete because it failed to account for Miss W's housing costs despite her declaring she was renting. While Zopa reasonably verified income and used statistical estimates for essential spending, it should have considered the full picture of Miss W's monthly obligations including rent. The consolidation benefit alone does not make a loan affordable if the borrower cannot sustainably meet all obligations. With only £121.77 remaining monthly after credit commitments and essential spending, there was insufficient buffer for housing costs and emergencies, making the loan unaffordable.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Zopa Bank Limited, all decisions | 582 | 27% |
| Irresponsible lending, all decisions | 30,770 | 37% |
| Personal loan, all decisions | 22,885 | 29% |
Source
Read the original decision on the Financial Ombudsman Service website