Affordability is income minus commitments minus living costs. Open banking assesses it by taking verified income from real transactions, subtracting committed spending such as rent, loans and subscriptions, and allowing for everyday living costs, to estimate the surplus a customer actually has. Because it uses real spending rather than a declared or averaged figure, it answers the question lenders really ask: can they afford it?
What affordability means under CONC 5 and the Consumer Duty
In UK lending, affordability is not whether someone can be charged, but whether they can repay without undue difficulty. The FCA's responsible-lending rules in CONC require a reasonable, proportionate assessment of creditworthiness, including the potential for the commitments to adversely affect the customer. The Consumer Duty reinforces this by expecting good outcomes founded on a realistic view of the customer's circumstances. Both point the same way: base the decision on evidence of what the customer can actually sustain. See income verification for the income side.
The calculation
The structure is simple; the quality is in the inputs. From verified monthly income you subtract two things:
- Committed expenditure: contractual or near-contractual outgoings the customer cannot easily avoid, such as rent or mortgage, existing loan and card repayments, insurance, childcare and essential subscriptions.
- Essential living costs: everyday spending on food, utilities, transport and the like.
What is left is the surplus. Open banking improves this calculation because committed expenditure and living costs are read from actual transactions rather than estimated, so the number reflects how the customer really lives.
Surplus (disposable) income
Surplus income, sometimes called disposable income, is the amount remaining after commitments and living costs. It is the pool a new repayment would have to come from, which is why it is the heart of the decision. A healthy surplus relative to the proposed repayment suggests the lending is sustainable; a thin or negative surplus is a clear signal to pause, even if a bureau score looks acceptable. Feeding this into a decision engine is covered on our platform.
How open banking changes it, vs declared and ONS data
Traditional affordability often relies on declared figures (what the customer types) or modelled assumptions (national averages such as ONS expenditure data applied to a household type). Both are approximations. Declared figures are optimistic or imprecise; averages do not describe the individual in front of you. Open banking replaces the approximation with observation: this customer's actual rent, actual commitments, actual spending. The result is usually a tighter, fairer assessment, sometimes more generous than an average would allow, sometimes more cautious, but grounded in reality either way.
A worked example
The figures below are illustrative, to show the structure of the calculation. They are not a real customer and not a lending recommendation.
A proposed repayment comfortably below the £290 surplus looks sustainable; one close to or above it does not, regardless of a headline income figure. The point of the exercise is that each line comes from real transactions, not a guess.
Limitations
- Unconnected accounts. If commitments run through an account the customer does not connect, the picture is incomplete.
- One-off distortions. A single unusual month can mislead; a longer window smooths this.
- Future changes. It measures the recent past, not a coming change in circumstances.
- Interpretation. What counts as committed vs discretionary is a policy choice, and good enrichment makes it explicit rather than hidden.
From the data consumer's side
Affordability is where open banking earns its place in your process: it turns "can they afford it?" from a declared guess into an evidenced number you can defend to a regulator and to the customer. Use it proportionately within your lending policy, be clear about what you treat as committed, and keep a manual route for customers who cannot connect. The payoff is fewer defaults from lending that was never affordable, and fewer wrong declines of customers who genuinely can pay.
How Credit Canary does it
Credit Canary produces the affordability view as part of a decision: verified income, identified commitments, estimated living costs and a surplus, delivered into your decision engine with credit bureau and identity data, so the affordability check and the lending rules run in one place.
Common questions
How does open banking assess affordability?
It takes verified income from real transactions, subtracts committed expenditure such as rent, loans and subscriptions, and accounts for everyday living costs, to estimate the surplus a customer has available. Because it uses actual spending, it is more realistic than declared or averaged figures.
What is surplus or disposable income?
It is what remains after income minus committed expenditure minus essential living costs. It is the amount a new repayment would have to come from, which is why it is central to an affordability decision.
Is open banking affordability more accurate than declared figures?
Usually, because it is based on what a customer actually spends rather than what they estimate or a national average assumes. It still has limits, such as unconnected accounts, so it supports rather than wholly replaces other checks.
Does open banking affordability meet FCA requirements?
It supports a creditworthiness assessment under CONC and good outcomes under the Consumer Duty by grounding the decision in evidence. Firms remain responsible for using it proportionately within their own lending policy.
Related pages
Primary sources
- FCA Handbook, CONC 5 (responsible lending) (checked 14 Oct 2026).
- FCA PS22/9, Consumer Duty (checked 14 Oct 2026).
Credit Canary provides open banking through fumopay limited, an FCA-authorised account information and payment initiation service provider (FRN 925689), of which Credit Canary is an agent. Underlying bank connectivity is also provided by fumopay limited. This page is an evergreen reference and is reviewed and dated; it is not regulatory, legal or financial advice.