Zilch Unaffordable Lending Complaints
A note before you start (5 August 2026): most BNPL lending only became FCA-regulated on 15 July 2026. For agreements taken out before that date the routes to a claim are limited — the affordability rules and the Financial Ombudsman's compulsory jurisdiction did not apply to BNPL activity (Zilch, regulated since 2020, is the exception). We are confirming with our claim partner exactly which BNPL agreements they can take on, and will update these pages once that is settled. Until then, please treat these pages as guidance on where complaints stand rather than an invitation to claim on a pre-regulation agreement.
Zilch is unique among the major UK BNPL providers — it has held a full FCA consumer credit authorisation since November 2020, when it became one of the first BNPL operators to complete the FCA Regulatory Sandbox. That means Zilch lending has been subject to CONC affordability rules and FOS jurisdiction throughout its operation, unlike Klarna, Clearpay or PayPal Pay in 3 (which only come fully under FCA regulation from 15 July 2026). For complaints purposes, Zilch is treated like any other regulated consumer credit provider.
Check your agreements on Recoup, our claim partner’s site
About Zilch
Zilch Technology Limited was founded in 2018 and launched its consumer-facing app in September 2020. It became one of the UK’s first FCA-authorised BNPL providers in November 2020 (consumer credit licence via the FCA Regulatory Sandbox). In December 2025 Zilch added a payment services licence (EMI), expanding its product range further.
Zilch’s model differs from other BNPL operators:
- It issues virtual cards (and physical Zilch cards) that customers can use anywhere Mastercard is accepted, rather than being checkout-integrated like Klarna or Clearpay.
- It runs soft credit checks and uses Open Banking data to assess affordability before each transaction, with limits set per customer.
- It became the first UK BNPL to report to all three major credit reference agencies (Experian, Equifax, TransUnion), starting in 2023.
- It partnered with StepChange in 2023 to integrate StepChange Direct’s service into the Zilch platform.
Regulatory position
Zilch holds:
- FCA consumer credit authorisation (since November 2020).
- EMI (payments services) authorisation (since December 2025).
Because Zilch has been FCA-regulated for consumer credit from launch, CONC 5.2A applies to all its lending. FOS’s compulsory jurisdiction has covered Zilch from the start. The 15 July 2026 BNPL regulation changes are largely a non-event for Zilch — the framework already applies.
Where Zilch complaints can succeed
Despite Zilch’s differentiated regulatory approach, complaints can still succeed where:
- The affordability assessment was not reasonable and proportionate to the customer’s actual circumstances at the time.
- Open Banking data showed obvious distress — gambling spend, returned direct debits, multiple BNPL or payday loans elsewhere — that should have prompted more cautious lending.
- Limits were increased without fresh review where the customer’s position had deteriorated.
- Vulnerability indicators were visible but not acted on.
- Repeat use built up to a level disproportionate to the customer’s sustainable repayment capacity.
How a claim works
The standard process applies:
- Eligibility check on your Zilch account history and circumstances at the time.
- Subject Access Request to Zilch — produces application data, the soft search and Open Banking review, transaction history and any vulnerability flags.
- Bank statements and statutory credit report for the affordability picture.
- Complaint to Zilch — eight-week response window applies.
- Escalation to the Financial Ombudsman if the response is unsatisfactory.
- Redress if successful — refund of fees and charges, 8% statutory interest, credit-file correction.
What is unusual about Zilch complaints
Because Zilch built its model around real-time Open Banking-based affordability, the evidence picture for complaints is different from a traditional lender:
- Zilch’s SAR response will typically include the Open Banking data it actually saw at the time of each transaction approval.
- The affordability question becomes — having seen that data, was the lending decision reasonable?
- Where the data showed obvious distress and Zilch lent anyway, the case is straightforward.
- Where Zilch declined transactions but lent on others, the complaint focuses on the transactions that proceeded.
Frequently asked questions
Is Zilch the same as other BNPL providers for complaint purposes?
Better, in regulatory terms. Because Zilch has held FCA authorisation since 2020, the standard CONC and FOS framework applies in full. Other BNPL operators only come fully under FCA regulation from 15 July 2026.
Does Section 75 apply?
Yes — because Zilch is regulated consumer credit, Section 75 of the Consumer Credit Act gives joint and several liability between Zilch and the merchant for purchases over £100 that turn out faulty, undelivered or misdescribed.
Related guides
- BNPL and the new FCA rules from July 2026
- Buy Now Pay Later claims hub
- The CONC rules on affordability
- How the Financial Ombudsman handles unaffordable lending complaints
- Do I have an unaffordable lending claim?
Check If You Could Be Owed Compensation
You may be eligible to complain if a lender gave you credit you couldn’t afford. Start a free check in minutes — no paperwork needed. No win, no fee if you choose to proceed.
