Increased provisions in line with a 'record-breaking' year for customer expansion at Zilch
In a significant development for the Buy Now, Pay Later (BNPL) sector, the UK government has announced plans to bring BNPL products under the regulatory purview of the Financial Conduct Authority (FCA) starting from July 2026. This move aims to protect consumers and ensure that third-party BNPL lenders comply with consumer credit standards.
For fintech companies like Zilch, this regulation means a shift towards a more regulated environment. As a third-party BNPL lender, Zilch will need to obtain FCA authorization and comply with the new regulatory requirements. This may involve operational costs and system changes, but it also provides clearer regulatory certainty for operating within the UK market.
The regulation will introduce several changes, including mandatory affordability and creditworthiness assessments, transparent pre-contract information, communications on missed repayments, and access to independent dispute resolution. These measures are designed to balance consumer protection with market innovation and sustainable growth.
Zilch, which was dubbed the UK's fastest growing fintech unicorn, has welcomed the new regulations as "another step towards improving consumer financial wellness and removing credit-related anxiety for our customers." The firm, which is FCA-regulated since 2020, believes that these regulations will help build trust and stability in the market.
In its financial report for 2025, Zilch marked a 79% reduction in net losses to £10.5m. The firm's registered customers topped five million, and its average number of employees for the year rose to 255 from 235. Gross Merchandise Value, which refers to total sales completed with Zilch, rose 73% to £1.9bn. Revenue for 2025 surged 93% to £110.3m.
However, the firm also raised provisions for credit losses to £27.4m, a 116% jump from the previous year. This reflects the increased risk associated with the BNPL sector, and Zilch, like other BNPL providers, will need to adapt its systems to comply with new disclosure, complaint handling, and reporting requirements under the new regulatory framework.
Despite these challenges, Zilch has shown resilience and growth. The firm surpassed a revenue run rate of £100m and booked its first quarterly profit in July 2024. Zilch's chief executive, Philip Belamant, has been generating buzz about a potential City listing in the last 12 months. Belamant, who took a pay cut on the firm's path to full-year profitability, with his pay packet falling to just over £1m, compared to £1.34m the year prior, has expressed interest in listing Zilch in London, stating it would be "fantastic" and "the right thing."
In the coming year and a half, Zilch plans to hire more than 400 people in the UK. This expansion will support the firm's growth and help it navigate the new regulatory landscape effectively. The UK's forthcoming BNPL regulation will formally bring fintech BNPL providers like Zilch into the regulated consumer credit space with significant new compliance obligations starting mid-2026.
[1] FCA Consultation Paper CP25/23: Regulation of third-party BNPL providers [2] FCA Press Release: FCA proposes regulation of third-party BNPL providers [3] UK Government Press Release: UK government announces crackdown on BNPL regulation [4] FCA Policy Statement PS25/17: Regulation of third-party BNPL providers [5] Zilch Annual Report and Accounts 2025
- The regulatory changes in the UK, as outlined in the FCA Consultation Paper CP25/23 and FCA Policy Statement PS25/17, will require fintech companies like Zilch to obtain FCAauthorization, adhering to new regulations in the banking and finance sector.
- The new regulations in the BNPL sector, as announced by the UK government and discussed in the FCA Press Release and UK Government Press Release, will necessitate technology updates for firms like Zilch to ensure compliance with mandated affordability and creditworthiness assessments, transparent pre-contract information, and access to independent dispute resolution.
- As the UK market shifts towards a more regulated environment for BNPL providers, Zilch believes that these regulations will contribute to improving the financial wellness of consumers, fostering trust and stability in the business, and promoting sustainable growth in the technology and investing sectors.
