The CONC Rules On Affordability — A Plain-English Guide
CONC stands for the Consumer Credit Sourcebook — the part of the FCA Handbook that sets the rules for consumer credit firms in the UK. When people talk about “the affordability rules”, they usually mean a specific section: CONC 5.2A. This page walks through what CONC 5.2A actually says, and what each part means in everyday terms.
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Who CONC 5.2A applies to
It applies to FCA-authorised lenders giving regulated consumer credit. That covers credit cards, personal loans, overdrafts, store and catalogue credit, doorstep loans, guarantor loans, payday loans and most other unsecured borrowing. It does not apply to first-charge mortgages (those are covered by MCOB) or to most regulated hire-purchase agreements for cars (covered by other CONC sections).
From 15 July 2026, CONC 5.2A is being extended to cover most third-party Buy Now Pay Later (deferred payment credit) agreements as well, following the Treasury’s 2025 legislation and the FCA’s policy statement PS26/1.
The core obligation — CONC 5.2A.4R
The rule that does the most work is CONC 5.2A.4R. It says, in summary, that before entering into a regulated credit agreement (or significantly increasing the amount of credit), the lender must undertake a creditworthiness assessment that takes into account:
- The potential for the commitments under the agreement to adversely affect the customer’s financial situation.
- The customer’s ability to make repayments as they fall due, and to repay the credit in full, without the customer incurring financial difficulty or experiencing significant adverse consequences.
- In a way that is proportionate to the individual circumstances of the case.
Two phrases here are doing the heavy lifting: “without the customer incurring financial difficulty” and “proportionate to the individual circumstances”. The first sets the standard — affordability is not just about whether the borrower technically can pay, but whether they can pay without harm. The second tells the lender to scale up checks where the situation calls for it.
Sustainability — CONC 5.2A.12R
CONC 5.2A.12R defines what sustainable repayment means. A repayment is sustainable if it can be made:
- Without the customer having to borrow further to meet it.
- While meeting other reasonable commitments and essential living expenses.
- Without significant adverse consequences for the customer’s financial situation.
This is a key part of the modern affordability test. A loan that was repaid in full and on time can still have been unaffordable if the customer only managed by taking out other credit, falling behind on rent, or going without essentials.
Proportionality — CONC 5.2A.16R to 5.2A.20G
These provisions describe what proportionate looks like. The lender should consider, among other things:
- The amount and duration of the credit, and the size and timing of the payments.
- The cost of the credit, including interest and charges.
- Any indications of vulnerability, such as known mental health issues, recent bereavement or financial distress.
- Any indications that information from the customer is unreliable.
- The frequency and nature of the borrower’s prior credit relationship with this lender.
In other words, the lender cannot simply tick a box and stop. The depth of the check has to match the nature of the borrower and the lending. A £100 first-time loan and a £15,000 second top-up to a customer with a recent default on file demand very different levels of scrutiny.
What the rules don’t require
CONC 5.2A does not require any particular method. It does not require a credit reference agency search in every case, although in practice one is almost always done. It does not require Open Banking data, or payslips, or any specific income verification step. What it requires is that whatever the lender does, the result is a check that is reasonable and proportionate to the circumstances.
Equally, the rules do not say a lender must refuse credit just because the borrower has past difficulties on file. The duty is to assess, not to refuse. But the assessment has to be honest about what the file shows — a thin check that conveniently overlooks recent defaults will not pass.
How CONC 5.2A connects to a claim
When the Financial Ombudsman looks at an unaffordable lending complaint, it asks two questions, in order:
- Did the lender carry out reasonable and proportionate checks? If yes, the analysis usually stops there.
- If proper checks had been carried out, would they have shown the lending was not affordable? If yes, the complaint succeeds even if the lender argues their lighter checks “passed”.
How the Financial Ombudsman handles unaffordable lending complaints.
Related guides
- What is unaffordable lending?
- What affordability checks should a lender carry out?
- Section 140A and the unfair relationship test
- How the Financial Ombudsman handles unaffordable lending complaints
- Do I have an unaffordable lending claim?
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