Understand the two perspectives
Credit risk concerns the possibility that repayments are not made when due. Affordability risk concerns the impact on the customer of making the repayments. CONC 5.2A requires a reasonable assessment based on sufficient information and includes rules and guidance on proportionality. This is a starting point for reading the applicable Handbook provisions, not a substitute for checking their application, exceptions and current version.
Create a product assessment brief
Describe the amount, duration, repayment frequency, cost and likely borrower circumstances. Record which information the application obtains and how it is verified or assessed. An assessment brief should explain why the approach fits the product rather than simply listing data fields. A low payment amount does not on its own explain the complete risk picture. Review how existing commitments, expenditure assumptions and changes in information are handled.
Make manual decisions explainable
When a reviewer accepts an exception, record the evidence used, the reason for departing from the standard process and the authority under which the exception was accepted. Keep the policy version and the outcome together. A manual process should be sufficiently clear that another reviewer can reconstruct the decision. Review accepted and declined cases as well as overrides, because a sample restricted to approvals can conceal how the process behaves elsewhere.
Test the assessment process
Use fictional test cases to check missing information, inconsistent income records, a changed credit limit and a customer with several commitments. These tests examine whether the operating process behaves as intended; they do not prove legal compliance. Record the expected behaviour, observed behaviour and owner of any gap. Check the current Handbook text before concluding that a particular action, data source or review frequency is required.
Primary sources
FCA Handbook: CONC 5.2A ↗Read the source in its current version. National implementing measures and product-specific applicability may require additional research.