Other guidance
A creditor may not be in a position to know whether a client has some form of limited mental capacity, and not be able to assess their level of understanding of any explanations – eg, if there is no face-to-face interaction or the internet is used for transactions. Additionally, not every client with a mental health problem is automatically vulnerable or unable to manage their money.
On its website the Money Advice Liaison Group (MALG) has two linked resources that address these issues, each with 12 steps for treating potentially vulnerable customers fairly:
•Lending, debt collection and mental health (published by the Royal College of Psychiatrists and the Money Advice Trust); and
•Vulnerability: a guide for advice agencies (published by the University of Bristol and the Money Advice Trust).
See malg.org.uk/resources/malg-mental-health-and-debt-guidelines for these guides and MALG’s publication endorsed by the Consumer Credit Sourcebook:1CONC 7.2.3G Good Practice Awareness Guidelines for Helping Consumers with Mental Health Conditions and Debt. The guidance includes the following.
•Creditors, debt collectors and advisers should have procedures in place to ensure that people with mental health problems are treated fairly and appropriately.
•If a creditor has been notified of a mental health problem, an adviser should be allowed a reasonable period to collect evidence and send it to the creditor. This could be extended, if the relevant evidence was not collected by the end of one month.
•If creditors sell debts once a mental health issue has been advised, they should monitor the debt purchaser to ensure compliance with the guidelines.
•If there is an imminent or serious threat of enforcement action being taken in these circumstances, advisers should consider if a mental health crisis moratorium (‘breathing space’) application is appropriate.
•If a client has a serious mental health problem, creditors should only start court action or enforce debts through the courts as a last resort and only when it is appropriate and fair for lenders to do so.
•Creditors should consider writing off unsecured debts when a client’s mental health problems are long term and unlikely to improve, and if it is highly likely they will be unable to pay outstanding debts.
•Disability benefits (personal independence payment, disability living allowance and attendance allowance) should be recognised as specifically awarded for meeting mobility and care needs. It is the client’s decision whether to include any of these benefits as disposable income in the financial statement.
Note: these guidelines only apply to managing debt problems and not to the stage when the debt was incurred. However, the guidelines suggest that creditors may wish to ‘flag’ the files of clients who have explained the effect of a mental health problem on money management and debt issues. In addition, a client and someone holding a power of attorney for them could voluntarily add information about their mental health problems to their credit reference file so that creditors who carry out a search as part of a credit application are aware of the position. This can be done by a ‘notice of correction’.
If creditors and advisers need more information about particular mental health terms, North East London and East London & The City Mental Health NHS Trusts and Mental Health Literacy produced a useful mental health glossary.2See and