If you were given credit that you could never realistically afford to repay, you may be able to make what’s called an affordability complaint.

This type of complaint argues that the lender failed to carry out proper checks before approving the credit.

If the complaint is upheld, the lender may have to:

• Refund interest and charges
• Remove negative marks from your credit file
• Reduce or write off remaining balances

Thousands of complaints like this are upheld every year by the Financial Ombudsman Service.

Here’s how the process works.

What Is an Affordability Complaint?

In the UK, lenders must follow rules set by the Financial Conduct Authority.

These rules say lenders must carry out reasonable and proportionate affordability checks before approving credit.

This means they should look at things like:

• Your income
• Your existing debts
• Your credit history
• Your regular living expenses
• Whether repayments would cause financial difficulty

If a lender approved credit despite clear signs it wasn’t affordable, you may have grounds to complain.

Situations Where a Complaint May Be Valid

Affordability complaints are commonly successful when:

• You already had defaults or CCJs when the credit was approved
• You had multiple payday loans or high-cost credit accounts
• You were over your credit limits
• You had existing arrangements to pay or missed payments
• The repayments took a large portion of your income
• The lender did not properly check your income or bank statements

It doesn’t matter whether the credit was:

• Credit cards
• Personal loans
• Car finance
• Catalogue accounts
• Buy Now Pay Later services
• Payday loans

The same affordability rules apply.

Step 1: Gather Your Evidence

Before sending a complaint, gather as much information as possible.

Helpful evidence can include:

• Your credit report from the time the credit was approved
• Bank statements
• Records of other debts you had at the time
• Details of missed payments or defaults

Your credit file can be accessed free through services such as Experian, Equifax, and TransUnion.

This evidence helps show what the lender should have seen when they assessed your application.

Step 2: Send a Complaint to the Lender

You must complain directly to the lender first.

They then have 8 weeks to investigate and respond.

Most lenders have a complaints email address listed on their website.

Your complaint should explain:

• Why the credit was unaffordable
• What your financial situation looked like at the time
• Why the lender should have spotted the problem

Below is a simple template you can use.

Affordability Complaint Template

You can send this by email or letter.

Subject: Affordability Complaint – Account Number [ACCOUNT NUMBER]

Dear Sir or Madam,

I am writing to raise a formal affordability complaint regarding the above account.

I believe the credit provided to me was unaffordable at the time it was approved and that appropriate affordability checks were not carried out before lending.

When this credit was granted, my financial situation included the following:

• Existing debts and defaults on my credit file
• High levels of credit utilisation
• Ongoing financial difficulties

Based on the information available at the time, I do not believe it was responsible to approve further credit. Had proper affordability checks been carried out – such as reviewing my credit file in detail or verifying my income and expenditure – it would have been clear that the repayments were not sustainable. Because of this lending, I experienced financial difficulty and struggled to maintain the repayments.

To resolve this complaint, I am asking that you:

• Refund any interest and charges applied to the account
• Remove any negative information recorded on my credit file in relation to this account
• Adjust the balance accordingly if the account remains outstanding

Please treat this as a formal complaint. If I do not receive a satisfactory response within eight weeks, I will consider referring the matter to the Financial Ombudsman Service. I look forward to your response.

Yours faithfully,

[Your Name]

[Address]

[Date of Birth]

Alternatively, visit the downloads page to download this template in Microsoft Word Format instead.

Step 3: Wait for the Lender’s Response

The lender has up to eight weeks to issue a final response.

They may:

• Uphold the complaint
• Partially uphold it
• Reject the complaint

If they reject it, don’t panic. Many valid complaints are rejected initially.

Step 4: Escalate to the Financial Ombudsman

If you disagree with the lender’s response, you can escalate the complaint to the Financial Ombudsman Service.

This is completely free.

The Ombudsman will review:

• Your evidence
• The lender’s checks
• Your credit history at the time

If they agree the lending was irresponsible, they can order the lender to compensate you.

How Much Compensation Can You Get?

If a complaint is upheld, outcomes often include:

• Interest refunds
• 8% statutory interest on refunded payments
• Credit file corrections
• Balance reductions or write-offs

In some cases, refunds can run into thousands of pounds, especially where multiple loans were involved.

Final Thoughts

Just because a lender approved credit doesn’t mean the lending decision was responsible.

Lenders are required to check that borrowing is affordable and sustainable. When they fail to do this, consumers have the right to challenge it.

Affordability complaints are one of the most effective ways to correct irresponsible lending and potentially repair the damage it caused.

And surprisingly often, they succeed.