Affordability is back under the spotlight.
For consumer credit lenders and brokers, it has always been a core requirement. But in 2026, expectations are tightening, and scrutiny is increasing. The Financial Conduct Authority is looking more closely at how firms assess affordability in practice, not just how those processes are described on paper.
This shift is being driven by a combination of Consumer Duty, complaints trends and ongoing supervisory work. The result is clear. Firms must be able to evidence that their affordability assessments are proportionate, consistent and capable of delivering good customer outcomes.
From proportionate to provable
Affordability has always been about proportionality. Firms are expected to take reasonable steps based on the product, risk profile and customer circumstances.
What is changing is the level of evidence required.
Supervisors are increasingly asking how affordability decisions are made, what data is used and how outcomes are monitored over time. It is no longer sufficient to describe a process; firms now need to show that it works in practice and that it leads to sustainable borrowing.
This often involves linking underwriting decisions to real-world performance. If customers are falling into arrears shortly after origination, or repeatedly refinancing, the FCA will expect firms to understand why and demonstrate what has changed as a result.
The link to complaints and redress
Affordability remains one of the most common drivers of complaints.
Cases reaching the Financial Ombudsman Service frequently centre on whether lending decisions were reasonable at the point they were made. Where firms cannot clearly evidence their approach, outcomes can quickly become unfavourable.
This is particularly relevant for historic lending. Complaints can emerge months or years after the original agreement, and firms are then required to reconstruct the rationale behind decisions using the data available at the time.
Weak documentation, inconsistent data or unclear decision logic can significantly undermine a firm’s position.
As complaint volumes and redress costs continue to evolve, affordability is no longer just a front-end control. It is a long-term risk factor.
Data, judgement and consistency
Affordability assessments sit at the intersection of data and judgment.
Firms are expected to use a combination of customer information, credit reference data and, increasingly, open banking or transactional insights. But data alone is not enough. The way it is interpreted and applied must be consistent and appropriate to the customer’s circumstances.
In practice, this is where many firms face challenges. Different channels, products or teams may apply affordability criteria in slightly different ways. Over time, this can lead to inconsistent outcomes and increased risk.
The FCA is increasingly focused on these inconsistencies. It expects firms to understand how decisions vary across their business and to ensure that similar customers are treated in similar ways.
Consumer Duty raises the bar
Consumer Duty has reinforced the importance of affordability as an outcomes issue. It is no longer sufficient to demonstrate that checks were completed. Firms must be able to show that lending decisions support customers in achieving their financial objectives without causing harm.
This includes understanding how affordability interacts with vulnerability, repeat borrowing and customer behaviour over time. Where patterns suggest that certain groups are experiencing poorer outcomes, firms are expected to identify this and respond.
Affordability is therefore not a one-off assessment. It is part of an ongoing view of customer outcomes.
Why firms should review their approach now
For many firms, affordability frameworks have evolved over time. Processes have been updated, data sources added, and criteria adjusted. However, those changes are not always reflected in a clear, consistent framework that can be explained and evidenced.
A proactive review can highlight where assumptions have drifted, where data is not being used effectively and where decision-making lacks clarity. This is particularly important ahead of supervisory engagement or in sectors where complaint volumes are rising.
The key question is straightforward. If a lending decision were challenged today, could it be clearly explained and defended?
How ALPH Legal & Compliance Can Support
ALPH Legal & Compliance supports consumer credit firms in reviewing and strengthening affordability frameworks.
We work with firms to assess how affordability is applied in practice, test consistency across products and channels, and ensure decisions can be clearly evidenced. This includes independent file reviews, complaints and redress analysis, and alignment with Consumer Duty expectations.
As scrutiny continues to increase, firms that can demonstrate a clear, consistent and well-evidenced approach to affordability will be far better positioned to manage both regulatory and financial risk.
To discuss how ALPH can support your firm, get in touch with our team today!