Complaining about an unaffordable loan

Irresponsible lending is when a lender gives credit to a borrower without checking if they can afford to pay it back¹. If that happened to you and you are now struggling financially, you have the right to complain to your lender¹. A complaint of this kind is a complaint that a lender gave credit without proper affordability checks².

It is one of the most common subjects of complaint in UK financial services. The Financial Ombudsman Service opened 4,800 irresponsible and unaffordable lending complaints in the third quarter of 2025/26, up from 4,600 the quarter before³, and processed 10,000 new cases in the first three months of 2025/26⁴. In the first quarter of 2024/25, 15,580 credit card complaints were about perceived irresponsible and unaffordable lending⁵.

The route is the same as for any other financial complaint, with one extra question at its centre: did the lender check properly? You complain to the lender first. If it does not send a final response within eight weeks, or you are unhappy with the response it does send, you can take the complaint to the Financial Ombudsman Service, which is free for consumers⁶.

What an irresponsible lending complaint is

The definition is narrow and practical. Irresponsible lending is when a lender gives credit to a borrower without checking if they can afford to pay it back¹. A complaint is an allegation that a lender gave credit without proper affordability checks². The ombudsman sees these complaints across a range of credit products, from car finance to payday lending¹¹.

When the ombudsman looks at a case, it examines whether your lender completed reasonable and proportionate checks before you took out the loan, or whether it treated you unreasonably or unfairly in some way⁶. That is the test the whole complaint turns on, and it is why the evidence you gather matters more than the wording of your complaint.

The rules behind the test come from the regulator's responsible lending guidance, which was first set out in the OFT's March 2010 guidance for creditors for irresponsible lending¹¹. The current rules sit in the FCA Handbook. For mortgages and home purchase plans, a firm must obtain evidence of the income declared by the customer and must not accept self-certification of income; the source of the evidence must be independent of the customer¹². Firms must also put in place, and be able to demonstrate that they have, robust systems and controls, including management information and key performance indicators, to monitor the effectiveness of their affordability assessments, including in preventing payment difficulties¹².

That second requirement matters to a complaint. It means a lender is expected to be able to show what it did, not just assert that it did something. If a lender cannot produce its checks, that is itself part of your case.

Evidence you need: income, spending and affordability checks

You do not have to prove the lender was wrong. The ombudsman's job is to weigh what the lender did against what the rules required, and the lender is expected to show its working. What you can do is set out your circumstances at the time of the loan clearly and back it up.

For guarantor loans, lenders need to make sure the borrower can afford the repayments without too much trouble, and must show what checks they did if the loan is complained about as unaffordable¹³. The same principle runs through other credit complaints.

Useful documents include:

• Bank statements showing your income and outgoings around the time of the application
• Payslips, an employment contract or a letter from your employer
• Proof of benefits, if these formed part of your income
• Evidence of existing credit commitments and their repayments
• A budget breakdown showing what was left after essentials

The kind of evidence lenders and agents ask for when checking affordability gives a good idea of what a proper check looks like: an employment contract or letter from your employer, recent payslips or bank statements, and proof of benefits¹⁴. Where a payment is being verified, a copy of your bank statement showing the payment going out, dated in the last three months, or a copy of your rent or mortgage statement dated in the last three months, is the usual requirement¹⁵.

If you are dealing with a lender or a hardship process now, similar evidence may be requested again: proof that you have tried to source other income, evidence of any other income or savings you may have, an explanation of reduced non-essential costs, evidence of living costs that are hard to meet, and a budget breakdown with a financial statement¹⁶.

How to complain: lender first, then the Financial Ombudsman

Follow your lender's complaints procedure first⁷. If you are still not happy, you can take your case to the Financial Ombudsman Service⁷. You must complain to your creditor or debt collection agency first¹⁷.

The ombudsman's own guidance is consistent across products: the first step is a complaint to the company involved, and if no final response letter arrives within eight weeks, or the response is unsatisfactory, the complaint can go to the ombudsman¹⁸. A formal complaint to the business comes first, and the consumer must either have received no reply or be unhappy with the final response¹⁹.

In practice the sequence is:

1. Complain in writing to the lender, setting out the loan, the date, your income and commitments at the time, and why you believe the affordability checks were inadequate.
2. Keep a copy of everything you send and note the date.
3. Wait for the lender's final response, or for eight weeks to pass.
4. If you are unhappy, or the lender has not replied, take the complaint to the Financial Ombudsman Service using its complaint form²⁰.
5. Send the ombudsman the lender's final response letter and your evidence.

Time limits: 6 months after the lender's reply, 6 years to complain

Two clocks run at once, and missing either can end your complaint.

The first is the lender's deadline. By law, your lender has eight weeks to respond to your complaint⁷. If it does not send you a final response letter within eight weeks, or you are unhappy with the response, you can bring the complaint to the ombudsman²¹.

The second is your deadline for going to the ombudsman. You have six months from the date of the final response from your lender to take your complaint to the Financial Ombudsman Service⁸. The same six-month rule applies to complaints about high-interest lenders²² and to complaints about anything else a bank has done, where the lender has eight weeks to respond²³.

There is also an outer limit on how old the underlying problem can be. The ombudsman will generally look at complaints within six years from the event complained of or, if later, within three years from the date on which the complainant became aware, or ought reasonably to have become aware, that they had cause for complaint⁹.

Is the time limit different in Scotland?

For ombudsman complaints, no. The six-year and three-year limits and the six-month deadline apply across the UK⁹. Scotland differs for court claims about a service, where you have a limit of five years to make a claim, starting from the time you discovered there was a problem with the service²⁴. The same five-year rule from the point you became aware of a problem applies to consumer claims in Scotland²⁵.

There is a separate wrinkle in mortgage shortfall cases, where there are different legal views about whether a lender has 5 or 20 years to take court action to recover a mortgage shortfall in Scotland²⁶. That concerns a lender pursuing you, not a complaint you bring, but it is worth knowing if a shortfall is part of your situation.

What you can get back: refunds and credit file corrections

The ombudsman's general approach is that the customer should be put back in the position they would have been in if the problem had not happened, and it may ask the business to pay compensation for distress or inconvenience²⁷.

Where a borrower should not have been given the loan, the ombudsman can require the lender to refund any interest and charges you paid, with interest, and remove any adverse information recorded on your credit file²⁸. If there is still a balance outstanding, it can require the removal of all interest and charges so the balance is only what was lent, deducting payments already made, with any overpayment refunded with interest¹³. Where a loan was repaid, the remedy is a refund of any interest and charges you paid, with interest, and removal of adverse information from your credit file⁶.

Other remedies the service can order include correcting someone's credit record, agreeing a repayment plan, changing the amount you owe, or paying compensation for distress or inconvenience²⁹. In banking cases it can ask a bank to refund payments you did not authorise, refund charges and interest the bank applied, compensate you for money you lost, and pay compensation for distress or inconvenience³⁰.

Will a successful complaint remove negative marks from my credit file?

It can, and this is often the most valuable part of the outcome. Where the lender should have realised further lending was clearly unsustainable, the ombudsman is likely to tell the lender to get those entries removed from the customer's credit file completely¹¹. One published case study records a borrower whose complaint led to the removal of a negative judgement from her credit file³¹.

The ombudsman has also asked banks to correct a credit file as part of a remedy²⁰. In its payday lending report, damage to the credit record featured in 24% of complaints in the sample, 85 of 353 cases³².

Complaints about credit cards, guarantor loans and other credit

The same process covers credit cards, guarantor loans, home credit, logbook loans, buy now pay later and debt collection. The ombudsman sees complaints about unaffordable lending across a range of credit products, from car finance to payday lending¹¹.

In the first quarter of 2026/27 the ombudsman opened 5,783 credit card complaints and 2,103 personal loan complaints³³. In the first quarter of 2024/25, 15,580 credit card complaints were about perceived irresponsible and unaffordable lending, and irresponsible and unaffordable lending were the most complained about issues⁵. In the second quarter of 2023/24, cases brought by professional representatives accounted for more than 90% of cases related to unaffordable or irresponsible lending, and 70% of complaints overall³⁴.

If your complaint is about a guarantor loan, there is a dedicated route: complaining that a guarantor loan was unaffordable. For the wider picture on how lenders assess borrowing, see loan affordability checks, and for the general process of raising a problem with a firm, see complaining about a lender.

Where to get free help

You do not need to pay anyone to bring an irresponsible lending complaint. The ombudsman is free for consumers¹⁰, and bringing a complaint to it will not cost you anything⁶.

Free, impartial help is available from debt advice charities and from MoneyHelper. If you are behind on payments while a complaint is running, the priority is usually to deal with the arrears and any threatened enforcement at the same time, and advisers can help with both. If your complaint concerns a loan you are still repaying, see what to do if you cannot repay a loan.