Upheld: irresponsible lending decision, account closure, unfair credit file reporting, poor customer service complaint against ZILCH TECHNOLOGY LIMITED trading as Zilch
Financial Ombudsman decision DRN-6224816 of 2026-04-02T00:00:00+00:00. irresponsible lending decision, account closure, unfair credit file reporting, poor customer service complaint against ZILCH TECHNOLOGY LIMITED trading as Zilch. Outcome: Upheld.
Decision detail
| Reference | DRN-6224816 |
|---|---|
| Decision date | 2026-04-02T00:00:00+00:00 |
| Firm | ZILCH TECHNOLOGY LIMITED trading as Zilch |
| Product | buy now pay later / credit account |
| Claim type | irresponsible lending decision, account closure, unfair credit file reporting, poor customer service |
| Outcome | Upheld |
| Remedy | Zilch Technology Limited trading as Zilch directed to pay Mr G £250 compensation for distress and inconvenience caused by account closure, customer service errors, and incorrect credit file reporting. |
Summary
Mr G opened a Zilch account in April 2025 and disclosed a Debt Relief Order (DRO) around end of April, whereupon Zilch closed the account and reported it incorrectly to credit agencies as delinquent. The DRO was likely visible on Mr G's credit file when he applied, but Zilch's credit checks failed to detect it. Zilch did not clearly communicate its position on DROs at the outset and provided poor customer service during the closure process, including unexplained changes to credit limits and repayment arrangements. The ombudsman upheld the complaint, finding Zilch's errors caused notable distress and anxiety, particularly regarding the impact on Mr G's DRO, but directed £250 compensation rather than account reopening, as Mr G did not meet Zilch's lending criteria.
The Ombudsman's reasoning
Zilch failed to identify Mr G's DRO during its credit checks despite it likely being visible on his credit file, then allowed him to open an account only to close it shortly after. While Zilch has the right to decide lending criteria, it failed to communicate its position on DROs clearly at the outset, causing avoidable frustration. Zilch's customer service was poor, including blocking the account without clear explanation and making unexplained changes to credit limits and repayment arrangements. Most significantly, Zilch incorrectly reported the account as delinquent despite no evidence of missed repayments, causing Mr G anxiety about the impact on his DRO. Although the DRO has now completed without issues, the initial incorrect reporting and poor handling caused notable distress over a relatively short period. Account reopening is not appropriate as Mr G did not meet Zilch's lending criteria, but compensation for the errors and their impact is warranted.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| ZILCH TECHNOLOGY LIMITED trading as Zilch, all decisions | 3 | 50% |
Source
Read the original decision on the Financial Ombudsman Service website