Zopa Bank’s profit booms despite ‘penalised’ motor finance hit
Zopa Bank cruised to its third consecutive year of profitability in 2025 but has offered a stark warning it feels “penalised” by the UK’s financial watchdog after getting swept up in the motor finance scandal.
The Canary Wharf fintech has set aside £7.9m in provisions for the car mis-selling saga, which centres around the use of ‘secret’ agreements between car dealers and lenders that left customers in the dark on how much commission salesmen were pocketing.
The bank said the FCA had previously indicated practices could differ between dealers and secondary brokers, due to a lack of evidence of customer harm in the latter, but this distinction was removed in the most recent proposals.
“They have gone back on that without any good explanation as for why,” Jaidev Janardana, Zopa’s chief executive, said.
Secondary brokers in the motor finance market introduce customers to a finance provider to complete a sale, acting as an intermediary between motor dealers and lenders, rather than providing the loan directly.
“[Zopa] entered the market with very competitive customer interest rates while paying
market-standard commissions,” Zopa’s chief financial officer Steve Hulme wrote in the bank’s annual report.
“The methodology proposed by the FCA appears to penalise this approach.”
Zopa profit booms despite motor finance hit
The challenger bank – along with countless banks across the country – is awaiting the final proposals from the Financial Conduct Authority (FCA) on its industry-wide redress scheme following its consultation on October’s outline.
Janardana said the bank had “called out some of these issues” during the consultation on the redress.
He added more than 50 per cent of the bank’s provision related to the “cost of the redress scheme as the FCA designed it, which we have concerns with.”
Banking giants across the City have raised concerns the retrospective regulatory crackdown, which goes as far back as 2007, could stunt investment flowing into the UK.
“I do feel that certainty in the rules that we play with…. is something that is important for creating a flourishing industrial sector,” Janardana said.
Still, Zopa delivered a 42 per cent increase to pre-tax profit in the last year, up from £31.6m in 2024.
It came as the digital bank’s revenue jumped 24 per cent to £377.1m as it added over 300,000 net new customers in 2025, amid a flurry of new product launches.
The challenger ramped up its disruption for incumbents over the last 12 months with the launch of its current account Biscuit and the acquisition of Rvvup to expand its grip in payments.
Janardana said the bank was in “no active conversations” on any future deals but it is something they are looking at “actively”.
“Anything that allows us to go beyond consumers, so a small business lender would be of interest for us.”