Irresponsible vs Unaffordable Lending — What’s The Difference?
“Irresponsible lending” and “unaffordable lending” are often used interchangeably, including by the Financial Ombudsman, by lenders, and on this site. They describe the same broad problem: credit given in circumstances where it should not have been. But the two terms come from different rule books and slightly different time periods, and the distinction can matter when you are looking at older complaints.
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Irresponsible lending — the OFT-era term
Before April 2014, consumer credit was regulated by the Office of Fair Trading. The OFT’s Irresponsible Lending Guidance (ILG), published in 2010, set out the principles lenders had to follow when deciding whether to lend. The phrase “irresponsible lending” became a shorthand for any breach of those principles, and the term carried over into how complaints were framed long after the OFT was wound up.
The ILG covered behaviours like: failing to assess affordability, encouraging borrowers to take more credit than they needed, repeatedly rolling over short-term loans, and failing to act on signs of distress. Its concepts still influence how the Financial Ombudsman looks at older complaints, particularly for credit taken out before 2014.
Unaffordable lending — the FCA-era framing
When consumer credit regulation transferred from the OFT to the FCA in April 2014, the rules were rewritten and placed in the Consumer Credit Sourcebook (CONC). The relevant section is CONC 5.2A, which requires a “reasonable and proportionate creditworthiness assessment” and specifically asks whether the borrower can repay “sustainably” without borrowing again or missing essential payments.
CONC 5.2A is the framework FOS uses today. The terminology shifted from “irresponsible” to “unaffordable” partly because the new rules zero in on a specific test — affordability — rather than the broader OFT concept of responsibility. The substance of what lenders are expected to do is similar, but the modern framing is more precise.
Why the distinction matters
For most borrowers, it doesn’t — both terms describe the same kind of complaint and lead to the same kind of remedy. But there are a few situations where the difference can matter:
- Older lending (pre-2014) — the OFT’s ILG is the relevant standard for the lender’s conduct at the time, even though the complaint is judged today by the FCA-regulated FOS. Complaints about pre-2014 lending are still being upheld; the rules of the day didn’t excuse poor checks.
- Section 140A claims — the Consumer Credit Act’s “unfair relationship” test in Section 140A is broader than affordability and can include irresponsible lending behaviours that don’t fit neatly into the CONC framework.
- Court vs Ombudsman — courts can use both labels, while FOS tends to frame its decisions around CONC and the underlying duty to lend fairly.
Which term should you use when complaining?
Either is fine. Lenders and the Financial Ombudsman understand both, and a complaint that uses one term will not be rejected because it should have used the other. What matters is that the complaint clearly explains what the lender did, what they knew or should have known, and why the credit was not affordable for you to repay sustainably.
The CONC rules on affordability — a plain-English guide. For Section 140A, see Section 140A and the unfair relationship test.
Related guides
- What is unaffordable lending?
- What affordability checks should a lender carry out?
- The CONC rules on affordability — a plain-English guide
- Section 140A and the unfair relationship test
- How the Financial Ombudsman handles unaffordable lending complaints
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