A crackdown by financial watchdogs on risky consumer loans could backfire and harm borrowers, lenders have claimed.

A trade body for companies behind £88bn of credit last year is battling Financial Conduct Authority (FCA) plans to tighten the lending rules.

The Finance & Leasing Association (FLA), whose members offer products including credit cards, retail finance and car loans, objects to many of the planned changes. Lenders would be required to take extra steps to ensure a person’s creditworthiness, including only factoring in an applicant’s income rather than “household” means.

A draft FLA consultation response, seen by The Sunday Telegraph, criticises the exclusion of household income as a “retrograde step in the drive to promote financial inclusion”. It also argues the FCA has powers to stop risky lending under the existing regime and says the regulator’s “overly paternal” approach “abrogates the customer from any responsibility”.

One lender, who preferred to remain anonymous, likened the FCA plans to “banning alcohol and making it only available via your doctor because some people are alcoholics”.

Experts have repeatedly raised the alarm about rising consumer credit – which has outstripped wage growth – with the Bank of England warning lenders risk losing £30bn if the economy worsens.

Lenders including Provident Financial and Brighthouse have faced criticism over irresponsible lending and been forced to pay compensation. A spokesman for the FLA said: “We are working with the FCA to ensure that responsibly provided credit continues.” The FCA declined to comment.