Affordability assessment policy template
An affordability assessment policy sets out how your firm decides whether a borrower can sustainably repay. This template gives a structure covering data, calculations, thresholds and vulnerable customers.
Why it matters
UK rules require a proportionate affordability assessment for most regulated lending, distinct from creditworthiness. A documented policy makes decisions consistent and defensible, and supports the Consumer Duty.
What to include
Purpose and principles
State that the policy ensures lending is affordable and sustainable, proportionate to the amount and type of credit.
Income
How income is captured and verified (declared, documents, or Open Banking), which income types count, and how stability and multiple sources are treated.
Expenditure
Essential costs, existing credit commitments, and how you source them (statistical estimates, declared figures, or verified bank data). Note buffers for the unexpected.
The calculation
Define disposable income and any ratios used (for example debt-to-income), and how a sustainable repayment is sized.
Thresholds and outcomes
The cut-offs for pass, refer and decline, and when a case must be reviewed by a human.
Vulnerable customers
How the policy flexes for customers in vulnerable circumstances, and the extra care applied.
Evidence and review
What is recorded for each decision, and how the policy and its outcomes are monitored and reviewed.
This template is general guidance to help you structure your own document. It is not legal, regulatory or compliance advice, and it is not a substitute for your own policies or professional advice. Adapt it to your firm, products and current regulatory requirements.
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