Zopa Bank Limited · DRN-6210167

The complaint Mrs M complains that Zopa Bank Limited (Zopa) lent to her irresponsibly by not carrying out sufficient and appropriate affordability checks before offering her a loan. What happened Mrs M applied for the following loan which was approved by Zopa. Date Amount of credit APR Loan term Monthly repayment November 2024 £1,000 26.24% 24 months £52.64 In summary, Mrs M complains that Zopa didn’t perform adequate affordability checks when considering her application. She says had they made proportionate checks they would have seen she already had numerous defaults and was in a debt management plan. She says that the defaults should have triggered extended checks and suggests that her current account records would have provided a more accurate insight than Office of National Statistics (ONS) modelling used by Zopa. Mrs M complained to Zopa in August 2025 who considered the matter but didn’t uphold the complaint. In their Final Response Letter dated September 2025 Zopa said they had carried out proportionate checks before lending including reference to Mrs M’s application data and credit file. They say affordability checks showed that there was likely sufficient disposable income to afford the new lending and their decision was both appropriate and affordable. Mrs M disagreed and brough the matter to this service in October 2025. An investigator considered the merits of the complaint including the available evidence. In his view, he said the checks performed by Zopa had been reasonable and appropriate to the lending being offered. He also said the lending had been fair. Mrs M disagreed and as there is no agreement, the matter has come to me for a final decision. I would like to thank Mrs M for her response to the investigator’s view and for outlining the matters she has asked me to consider. I will respond to these at relevant points within this decision. Mrs M references a second matter also relating to Zopa and asks that these are considered together. I will deal with both matters separately as they are for different products with subtly different considerations. But I can assure Mrs M that I have taken an holistic view of both matters including the broader timeline and sequencing between both cases. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. We’ve set out our approach to considering unaffordable and irresponsible lending complaints on our website – including the key relevant rules, guidance, good industry practice and law.

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In short, lenders must ensure that any credit that is approved is affordable and sustainable for the borrower. I’ve followed our approach when deciding Mrs M’s complaint. Having examined the available evidence in this case, and having considered the further points made by Mrs M I find myself agreeing with the investigator’s view. I recognise this will be a disappointment to Mrs M. I will explain why I have reached this conclusion. When Mrs M applied for the loan she declared a gross annual income of £42,000 and said she was employed full time. Mrs M said she was a homeowner with a joint mortgage recording £350 monthly outgoing in relation to her housing costs. The purpose of the loan here is important and was given as debt consolidation. Zopa took the details provided by Mrs M and referenced a third party credit file which validated an income in line with that declared on application. I think this was a reasonable way to verify income given the level of credit being offered. It is common ground that Mrs M’s credit file wasn’t perfect. While it showed no recent County Court Judgements (CCJ) or Individual Voluntary Arrangements (IVA), it did show a number of previous defaults with balances of £10,925. In addition, it showed four revolving credit accounts with a total balance of around £3,578, a joint mortgage with a balance of around £97,459 and monthly contributions of £736 per month. There were also outstanding telecoms balances of £174. The credit file showed total external unsecured debt of around £14,677. I think this information gave Zopa appropriate insight into Mrs M’s outstanding credit and default history. In her response to the investigator’s view, Mrs M says that her previous financial difficulties were such that extended checks should have been made and this is particularly the case given she was in a debt management plan at the time. Mrs M says this was a sign of ongoing financial distress. I have considered these points carefully, but in this case, I am not persuaded this is correct. It is clear that Zopa were aware of the previous defaults. There is nothing in the evidence I have seen that would indicate they were aware of an ongoing repayment plan, not was this disclosed by Mrs M on application. I don’t doubt Mrs M’s position as described, but Zopa could not consider something that was not on the credit file and had not been otherwise disclosed to them. Turning to the credit file referenced by Zopa, this is already more detailed than typical bureau data summaries and given the amount of credit being offered I think this was proportionate to the lending. Mrs M asks me to consider whether her current account records would be a more accurate record of her actual outgoings at the time. I don’t doubt that they would be, but for a £1,000 loan with no defaults for the previous 22 months, I don’t think this level of intrusive check would have been necessary or proportionate. I also think that given the passage of nearly two years (22 months) between the last default and the application, it was not unreasonable of Zopa to have treated this as a potentially historic situation not necessarily reflecting Mrs M’s current financial position. This is further supported by payments having been made to reduce the default balances in the interim. Also, a loan to consolidate existing credit would be consistent with someone rebuilding their credit file. I think the information they had was sufficient to make a decision. Similarly, Mrs M refers me to FCA rules and guidelines and specifically CONC 5.2 saying this would require consideration of actual expenditure rather than ONS data sets. Again, I have considered this point but on the evidence in this case am not persuaded of the case being made.

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CONC 5.2A.17 is the relevant regulation which states: 1. (2) The firm must take reasonable steps to determine the amount, or make a reasonable estimate, of the customer’s current non-discretionary expenditure. I think given the last default was 22 months earlier, there is no reason to assume that ONS datasets wouldn’t apply to Mrs M. CONC allows for reasonable estimates to be used and ONS data is widely used to support applications across the sector. I don’t think it was unreasonable to rely on them as part of a wider assessment in this case. In her response to the investigator’s view, Mrs M raises six further points relating to his findings. I have not replicated those here as I see the investigator responded to them by email dated 28th November 2025. I agree with the points he made and cannot add further to them. Given what I have said, I think the checks made by Zopa were reasonable and proportionate to the lending. I am also persuaded that Zopa gave reasonable consideration to the affordability of the loan with a combination of data provided on the application, that contained within the credit file and ONS data modelling,. This approach led to an estimated disposable income in excess of £800 per month. I am persuaded that Zopa has considered their accuracy by virtue of amending some of the figures provided and allowing a 100% contribution to the joint mortgage. Having checked these calculations and the approach taken by Zopa I am persuaded that the data visible to them suggested a level of disposable income that meant repayments could likely be made. In light of what I have said above, I think that the lending decision made by Zopa was a fair one. In reaching my conclusions, I’ve also considered whether the lending relationship between Mrs M and Zopa might have been unfair to Mrs M under s140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve already explained, I’m satisfied that Zopa did not lend irresponsibly when providing Mrs M with the loan. I haven’t seen anything to suggest that s140A CCA would, given the facts of this complaint, lead to a different outcome here. My final decision My final decision is that I don’t uphold Mrs M’s complaint against Zopa Bank Limited Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs M to accept or reject my decision before 25 May 2026. Richard Bellamy Ombudsman

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