When a lender says yes to a credit application, it should mean something. It should mean that someone — or a system — looked at your financial situation carefully, weighed it against the obligations of the product being offered, and made a reasonable judgement that you could afford it.

In far too many cases, that didn't happen. Approvals were fast, checks were superficial, and the true picture of what a borrower could realistically manage was never properly considered. If that sounds familiar, it's worth understanding exactly what a lender was supposed to do — because the gap between what they should have done and what they actually did is the basis of an irresponsible lending complaint.

The Legal Obligation to Check Affordability

Under the FCA's Consumer Credit sourcebook (CONC), lenders are required to undertake a reasonable assessment of creditworthiness before approving any credit agreement. This is not a box-ticking exercise. It is a substantive obligation that requires lenders to consider whether the credit is genuinely affordable — not just whether the applicant passes a minimum credit score threshold.

The obligation applies to all regulated consumer credit products: personal loans, payday loans, guarantor loans, credit cards, catalogue accounts, car finance, and more. The specific depth of the assessment should be proportionate to the nature and value of the credit — but even for a smaller loan, the check cannot be meaningless.

What a Proper Affordability Check Should Include

A lender carrying out a genuine affordability assessment should be looking at a combination of the following:

Income verification. How much does the applicant actually earn? Is the income stable? Is it employed income, self-employed income, or benefits — and has the lender treated these appropriately? Simply accepting a stated figure without any verification is not adequate for higher-risk products.

Essential outgoings. Rent or mortgage payments, council tax, utility bills, food, transport, childcare. These are not optional costs, and a proper affordability check should take them into account. Lenders who only asked about existing debt repayments — ignoring basic living costs — were not conducting an adequate assessment.

Existing credit commitments. A credit file check will reveal existing loans, credit cards, overdrafts, and finance agreements. A lender who approved a new product without accounting for the repayment obligations already on the credit file was failing in their duty.

Recent credit behaviour. Missed payments, defaults, and County Court Judgements are visible on a credit file and are clear signals of financial difficulty. Approving further credit to someone whose file showed a pattern of financial stress raises serious questions about whether the lender was acting responsibly.

Bank statement analysis. For higher-risk lending — payday loans, guarantor loans, high-APR products — the FCA's guidance indicates that bank statements can and should be used to verify income and spending patterns. A lender who approved a high-cost loan without looking at actual bank activity, when such checks were available and proportionate, may not have met the required standard.

Our article on car finance affordability checks and when lenders should have said no explores how these obligations applied specifically in the motor finance market — but the same framework underpins all consumer credit.

Where Lenders Routinely Fell Short

The gap between what was required and what actually happened was, in many sectors, substantial.

Payday lenders in particular became notorious for approvals that were almost instantaneous — in some cases, fully automated decisions made within seconds. That speed was part of the product's appeal, but it was fundamentally incompatible with a meaningful affordability assessment. A mis sold payday loan claim often rests precisely on this failure: the lender knew, or should have known, that the borrower was already in financial difficulty — and approved the loan anyway.

Car finance lenders faced similar criticisms. Applications were frequently assessed primarily on whether an applicant could pass a credit score threshold, with less attention paid to whether the monthly payment was genuinely manageable within their broader financial picture. Our guide to no win no fee car finance claims covers how this played out across PCP and HP agreements specifically.

Catalogue credit and store card providers sometimes increased credit limits without any reassessment of affordability — relying on the fact that a customer had been paying on time, without asking whether the higher limit was actually affordable if fully utilised.

What "Relying on What the Customer Told Them" Actually Means

Some lenders defend affordability complaints by pointing to the information the customer provided at application. If the customer stated an income of £30,000 and the lender approved based on that, was the lender wrong to trust it?

The answer depends on the circumstances. For low-risk, low-value credit, taking a stated income at face value may be reasonable. For high-cost, high-risk products — particularly where the customer's credit file already showed signs of financial difficulty — the FCA's guidance suggests that lenders should be doing more than accepting self-declared figures. They should be verifying income where the stakes are high enough to warrant it.

A lender who approved a high-APR loan to someone whose credit file showed multiple recent missed payments and active payday loans, based solely on a stated income figure, is in a difficult position when that approval is later challenged.

Why This Matters for Your Complaint

Understanding what a lender should have done gives you the basis for a complaint when they didn't do it. You don't need to have been the perfect borrower to have a valid claim — you need to show that your financial situation, at the time the credit was approved, was one that a proper check would have flagged as unaffordable or unacceptably risky.

The starting point is gathering evidence of what your finances looked like at the time: bank statements, payslips, existing credit commitments, any benefit statements, and your credit file from the relevant period. The lender's own records — available through a Subject Access Request — will show what checks they actually carried out and what information they held.

Our article on what evidence helps a missold car finance claim covers the document-gathering process in detail. While it focuses on car finance, the same evidence principles apply to irresponsible lending complaints across all credit types.

If you're also dealing with other financial issues — whether that's fraud recovery after being targeted by a scam, a housing disrepair no win no fee claim for a property your landlord has failed to maintain, or car finance that was sold without proper disclosure — Claim First handles all of these areas. We also help with issues like rejected car finance applications where dealer advice crossed the line and hire purchase mis-selling — so wherever you've been let down financially, it's worth finding out whether you have a case.

Ready to Find Out Whether Your Credit Was Approved Irresponsibly?

If a lender approved you for credit without properly checking whether you could afford it, you may be entitled to a refund of the interest and charges you paid — and potentially a write-off of any outstanding balance.

Claim today with Claim First — we're an FCA-authorised UK claims management team working on a strict No Win, No Fee basis. No upfront costs, no hidden fees, nothing to pay unless your claim succeeds.

Start your claim now — it takes just a few minutes, and we'll handle everything from there.