The 4.4 Million Borrowers Lenders Are Leaving Behind: How Open Banking Finally Changes That

There are approximately 4.4 million self-employed people in the UK. They run businesses, pay taxes and contribute significantly to the economy. Many of them want mortgages. And yet, by almost every measure, the lending industry is failing them.

A 2025 survey published by Introducer Today found that 83% of self-employed applicants believe mortgage lending criteria is stacked against them; 82% have reconsidered their employment status because of how difficult securing a mortgage has become. That is not a fringe concern. It is a systemic failure that creates a significant commercial opportunity for lenders and brokers willing to do things differently.

The good news is that the tools to do things differently now exist. Open banking affordability data offers lenders a real-time, verifiable window into a self-employed borrower's actual financial life; one that no set of two-year-old accounts or tax returns can match. And with HMRC's Making Tax Digital (MTD) for Income Tax now live from April 2026, the data landscape is about to become even richer.

83% of self-employed applicants say mortgage lending criteria is stacked against them — creating a major addressable market for lenders who adapt. (Source: Introducer Today / survey data, February 2025)

Why traditional underwriting falls short

The standard self-employed mortgage application is built around documents: two years of SA302 tax returns, company accounts signed off by a qualified accountant, a letter confirming trading continuity. These have served lenders well enough; but they have three fundamental weaknesses.

First, they are old. A set of accounts filed in January 2026 may reflect trading conditions from the 2023/24 tax year. A business that has grown, pivoted, or recovered in the intervening period will be assessed on historical data that may no longer be representative.

Second, they are incentivised to be low. Self-employed individuals, particularly limited company directors, have every reason to minimise declared profit for tax purposes. The same behaviour that is financially rational at tax time makes them look like a worse credit risk at mortgage time. Lenders who can only look at declared income will consistently underestimate the true affordability of self-employed borrowers.

Third, they are static snapshots rather than dynamic evidence. A sole trader's accounts tell you what happened. They do not tell you what is happening now; whether clients are still paying, whether the cash flow is stable, or whether a recent contract win has materially changed the picture.

"Lenders who rely solely on tax returns and accounts will consistently underestimate self-employed affordability; it would write off a borrower segment that, with better data, carries very manageable risk." — Moxim, April 2026

What open banking actually shows

Open banking affordability tools work by connecting, with the borrower's consent, directly to their bank account data. The result is a categorised, real-time view of income and expenditure that traditional documentation simply cannot replicate.

For a self-employed borrower, this means a lender or broker can see: regular invoice receipts or client payments actually landing in the account; seasonal variations in income and how the borrower manages them; fixed outgoings such as business overheads, PAYE for employees, or pension contributions; and personal expenditure categories that give a genuine picture of lifestyle spending versus committed costs.

Plend, an FCA-regulated lender that uses open banking data for affordability assessments, has demonstrated what this unlocks for underserved borrowers. Its 2025 research found that 72% of its customer base would have been excluded from credit under traditional scoring models, yet through open banking-informed assessment, those borrowers accessed loans at an average saving of £2,077 compared with the alternative market rates. The principle extends directly to the mortgage market: better data finds creditworthy borrowers that blunt-instrument underwriting misses.

Salad Money, a community development finance institution, has used open banking transaction data to lend over £164 million to more than 112,000 customers; many of whom had previously been declined by mainstream lenders. The data capability is mature, proven, and already available via SaaS integration.

Making Tax Digital: a structural shift that raises the stakes

A critical regulatory development makes this moment particularly important for lenders. From 6 April 2026, HMRC's Making Tax Digital for Income Tax (MTD ITSA) came into effect for sole traders and landlords with gross income above £50,000. This means approximately 860,000 individuals are now required to submit quarterly digital income updates to HMRC, five submissions a year instead of one annual return.

For lenders, this is significant. Within a year or two, a standardised, quarterly, digitally reported income record will exist for the majority of higher-earning self-employed borrowers. The income opacity that has historically made this segment difficult to underwrite will reduce substantially.

The lenders who build their self-employed affordability infrastructure now, using open banking data today, will be best positioned to exploit this richer data environment as it matures. Those who wait risk being behind the curve as competitors redesign their self-employed propositions around real-time financial evidence.

The FCA's direction: underserved borrowers are in focus

Regulatory pressure is also moving in this direction. In July 2025, the FCA published Policy Statement PS25/11, its Mortgage Rule Review, which explicitly identified the need to improve access for underserved borrower segments, including the self-employed. The regulator has signalled that it will consult further in 2026 on alternative affordability evidence and loan-to-income flexibility for borrowers whose circumstances do not fit standard criteria.

Under Consumer Duty, lenders and intermediaries are already obliged to demonstrate that their products and services deliver good outcomes for the customers they serve. A proposition that systematically declines or underserves 4.4 million self-employed borrowers on the basis of methodologically outdated assessment is increasingly difficult to square with that duty; both commercially and regulatorily.

The commercial case for acting now

Consider the opportunity in pure volume terms. Self-employed workers represent roughly 13% of the UK workforce. In a competitive purchase and remortgage market, a lender that can credibly underwrite this segment, with speed and confidence, has access to a substantial flow of cases that others will continue to decline or underprice.

For mortgage brokers, the case is equally direct. Self-employed clients are disproportionately loyal. They typically have more complex financial situations that generate repeat business; and they refer extensively within their professional networks. A broker who can reliably find solutions for self-employed clients, rather than returning with a declined DIP, will build a book that outperforms peers who cannot.

The operational cost of integrating open banking affordability data is also far lower than most firms assume. Modern SaaS providers, including Moxim, connect via API to existing broker or lender workflows. There is no large IT project, no extended procurement cycle, and no need to rebuild underwriting from scratch. The additional data layer sits alongside existing credit reference and income verification processes, enhancing the decision without replacing it.

What to look for in an open banking affordability partner

Not all open banking SaaS solutions are equivalent. When evaluating providers, lenders and brokers should look for:

• Transparent categorisation methodology with clear audit trails suitable for FCA scrutiny
• Integration speed, meaning how quickly the tool can be live in your workflow
• Lender-ready output formats that give underwriters something they can actually act on
• A provider that understands the regulatory environment and builds compliantly by default

Moxim has been designed from the ground up with exactly these requirements in mind. We provide a categorised transaction analysis and affordability scoring layer that connects via API to existing workflows; delivering lender-ready affordability reports for underwriters without requiring a system overhaul. We are purpose-built for brokers and lenders who are not household names but who want to compete on data quality rather than scale.

Moxim collates a client's income, spending, credit, identity and property data into a clean affordability assessment the moment they share access — removing manual data entry and document chasing from case prep. We are currently onboarding pilot broker partners.

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What this costs a firm that waits

Consider a mid-sized broker firm handling 60 self-employed cases a month. If a manual affordability review adds an average of two hours of case-handler time per application, that is 120 hours a month spent chasing accountants' letters and reconciling tax years against bank statements, time that produces no advice fee and no client-facing value. This is an illustrative model, not a specific study finding, but the order of magnitude is consistent with the document-chasing costs described elsewhere in this piece.

Consumer Duty adds a second dimension to that cost. A firm that can show a self-employed client's affordability was assessed against verified, real-time transaction data, rather than a set of accounts that may be eighteen months out of date, has a materially stronger audit trail than one relying on self-certification. When the FCA asks what evidence underpinned a lending decision, "the accountant's letter said the income was sustainable" is a weaker answer than a categorised, timestamped record of the money actually moving through the applicant's accounts.

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