Wednesday 18 June

Lynne Jones directed attendees to the copies of the Mind report In the red – debt and mental health around the room, saying it was a great report.  Ms Jones added that we have four speakers to discuss the report today and introduced them.


Emma Mamo, Campaigns Officer and report author, Mind

Emma said the links between debt and mental health is quite obvious.   Being in debt can negatively affect a person’s mental health, while living with a mental health problem increases the likelihood of falling into debt. As there has been no in-depth research focusing specifically on this area, Mind commissioned the Royal College of Psychiatrists to investigate what is involved in the relationship between debt and mental health, the impact of debt recovery and the disclosure of mental health problems to creditors and its impact. Amongst the key findings of the report concerned the poor living standards of those with problem debt, including the fact that almost 50 per cent were living on a weekly household income of £200 or less, defined by the Government as ‘living on the poverty line’.

Other problems found include a fear of being seen as ‘pulling a fast one’, due to peoples’ disability being invisible, which led to two thirds of those surveyed not disclosing their condition to their creditors, and little or no access to affordable sources of credit. It may be that those with mental health problems are not engaging with creditors due to their condition.  It is important that creditors recognise that.

The report is meant to complement and strengthen the 2007 Money Advice Liaison Group guidelines for creditors and money advisers on debt and mental health.   In addition to creditors adhering to these guidelines, the report’s recommendations include: specialist mental health training for bank, debt-collection agency and debt-purchasing company staff; better regulation of bailiffs; advice on debt and welfare benefits to be based in healthcare settings; closer working between health and social care professionals, creditors and debt advisers to better support clients who are experiencing debt problems; and improved access to the social fund, as applicants and potential applicants are experiencing very real difficulties accessing the fund, pursuing their cases and getting satisfactory decisions.

The report marks the start of a year long campaign to promote the issue of mental health and debt, during which Mind want to make some real achievements in this area.  Mind has been given a grant by the Financial Standards Authority to go towards the campaign, which includes helping Mind run a series of financial capability surgeries around the country and develop a financial section on its website that provides advice and information for anyone with mental health problems who is struggling with debt.

Peter Tutton, Social Policy Officer, Citizens Advice

The CAB service saw around 550,000 people seeking advice about debt last year.  There is a growing awareness of the problems of debt. For example, we have recently had the Consumer Credit Act, which recognised that there are problems with the way some borrowers have been treated by their lenders.  As a result, we have new licensing powers for the OFT and a new protection against ‘unfair credit relationships’ provisions that came into full force in April. The idea of these reforms is to give consumers and regulators more power to challenge bad practices by credit firms in an effective and proportionate way.

Also, we have the government’s current review of consumer law that is looking at the effectiveness of the current consumer protection regime across a whole range of markets, including consumer credit.  Among the overarching questions raised in this review is ‘How well do the current legal protections serve vulnerable consumers’

So against this background, Mind’s report on debt and mental health is particularly timely and hopefully will spark an important and necessary debate among policy makers, consumers groups and business.  Citizens Advice supports Mind’s finding that there seems to be an association between debt and experience of mental health problems. For instance a recent survey of CAB debt clients found that a significant proportion, around 17 per cent, of those seeking advice about debt problems had problems with mental health.  Like the Mind report we found that around half of CAB debt clients with mental health problems had income levels below the poverty line, suggesting that debt poverty and mental health can bind together into a self re-enforcing problem. 

However, evidence from CAB clients shows that the relationship between debt and mental health and the way that problem debt is experienced by borrowers is in part determined by the practices of credit businesses that could be improved now, today. For example:

A CAB in the Midlands saw a single man with mental health problems. He had been a debt client January 2006 when he could no longer work and service his debts. He was in receipt of Incapacity Benefit and Disability Living Allowance. In May 2007 he took out a loan over the telephone from a Bank while he was suffering from a severe bipolar episode and shortly afterwards he was sectioned for six weeks. This added yet another debt to his existing total of now approximately £19,000

The CAB commented that the Bank could be excused for not realising that the man was in a manic state when he applied for the loan but they cannot be excused for failing to check his credit history. He had defaulted loans and credit cards with other financial institutions and his current account with the Bank was in overdraft to £1400 at the time he applied for the loan.

Bureaux have also experienced similar problems with debt collection:

A CAB in Cumbria saw a woman who had severe mental health issues. She was in receipt of income support, and disability living allowance middle rate care and lower rate mobility. She has one child aged 11. She had a CPN and a Psychiatrist. She had got into difficulties with a £10,000 bank loan but had negotiated monthly repayment of £65 with the help of an advice agency that had the creditor medical evidence from both the CPN and the psychiatrist.  However the lender subsequently rang her and bullied her into paying £90 per month which she could not afford. She told the CAB that she was frightened not to pay the £90 as the lender had told her the debt would be passed to a debt collector and she could not cope with anyone coming to the door. She said it would make her ill and she might lose her child as a result.

A CAB in Hertfordshire saw a woman with debt problems.  She was under the care of a mental health crisis team following a long period of post-natal depression. Her partner left her and debts accumulated during this time. All her benefits were being paid directly into a bank account but the funds were taken by the bank to clear their own debt.  As a result all the debts were escalating and the woman tried to take her own life.

These cases also highlight how the majority of the debt related problems faced by people experiencing mental distress are similar to the problems faced by other borrowers in financial difficulties. However the capacity to deal with problems may be reduced and the effects of debt more keenly felt.

It is clear that the issue of mental health and debt is not an issue at the margins but perhaps one of the key central issues for firms, regulators, government and consumer advocates to focus on today because if firms are able to make adjustments to ensure that customers experiencing mental health problems are treated fairly then there is a good chance that they will be ensuring that all their customers are treated fairly.

Citizens Advice congratulates Mind for raising awareness of these issues with the In the Red report and looks forward to seeing the key recommendations taken forward.

A user of mental health services

(Note – for the purposes of these minutes, the user of mental health services preferred to remain anonymous and for her comments to be kept brief)

She explained that she has been a user of secondary mental health services since being a teenager, including five inpatient stays in the last ten years.   She is one of 91% of mental health sufferers that experience debt problems and felt ashamed until she recently realised how many other people with mental health problems have issues with debt. She then explained how each of her mental health diagnoses has affected her and her ability to manage her money. She also noted that at no point has any health professional asked her how she manages money.

What helped the user of mental health services included:

·         Limited access to cash (for example, a freedom pass).

·         Notes to account for how she used petty cash and paid her bills.

·         Freezing her credit cards (literally), which means she cannot make any impulse purchases.

·         Her brother, who works in banking, talking her through how it all worked and helping her come up with a plan.

·         Her friendly bank in Ormskirk, which she was a student.

·         Calls from her bank, Barclays, after she went past her overdraft limit three months running. Barclays consequently helped her rearrange payments.

·         Accessible disability helpline who helped her claim the benefits she was entitled to (this included home visits).

·         Easy access to high interest loans.

·         Reconsolidation of loans.

·         Advice to claim benefits properly.

·         Keeping a log book of expenditure.

 
What didn’t help included:

·         The inconvenient opening times of some agencies, as well as:

o        Queues to see people in, for example, banks.

o        Waiting rooms.

o        Delays.

·         Not being able to remember which bills she had paid or not paid.

·         Losing her entitlement to her freedom pass.

·         Internet banking, which she finds very confusing.

·         Access to credit cards/only being able to take out a bank loan if you have a good credit rating because you have a credit card.

·         Paying off credit cards except nominal interest charges – missing these resulted in her accumulating £200 in charges.

·         Not being able to access some financial services such as travel and life insurance because of her diagnoses.

Sandra Quinn, Director of Communications, APACS (The UK payments association)

Communication and advice works well, particularly if firms work on a case by case basis. Large businesses get into the habit of treating people as if they are all the same. Although this is improving, relationships need to be on a more equitable footing. In general, the industry hasn’t looked at customers with mental health illness and protections for them.  Hopefully, in a year’s time we will see that the campaign has worked and changed what industry does.

Referring to the user of mental health services’ comments on internet banking, Sandra said that many banks see it as vital to their future, however there is a payments council that looks at how users of payments (including individual customers) are affected by different types of payments. She suggested that Mind should join its user forum to discuss these issues and ensure that those with mental illness are properly represented.

Sandra mentioned that the new Banking Code, which came into effect in March 2008, includes guidelines on credit agreements and responsible lending which are not just lip service but are a range of robust suggestions that banks and other creditors can adopt. For example, keeping an eye on how customers spend their money, which is about getting the balance right so that creditors are helpful rather than intrusive. As the user of mental health services found with Barclays, when creditors proactively call or write to customers if they notice any unusual behaviour, it can be very beneficial and give individuals opportunities to think again about their expenditure.

On disclosing mental health problems, Sandra said that banks need to know about these issues. However, rather than be told every single time they come into contact with a customer, there should be a way to flag problems internally so that all staff that need to be made aware are.

Question and answer session

• Adam Afriyie MP asked if there is disagreement from the banks on guidelines and, if there is, on which points?  Emma Mamo replied that there needs to be more of a commitment to the working code and that the BBA could come up with guidelines of their own. The main concern Mind has is how either code trickles down to the frontlines. Peter Tutton agreed, saying that the MALG is a positive forum but that the proof of the pudding on its guidelines will be how it affects individuals. Sandra Quinn added that there will be a best practice guidelines meeting in July, which is meant to work alongside the code.

• Ed Simpson, FLA, said that the lending code covers the unsecured credit market to deal with those with mental health problems sensitively.  The FLA itself has undertaken initiatives such as producing a video with Citizens Advice for its members in 2005. The FLA want to discuss with the RCPsych how to evolve the latter’s work in this area. It is sponsoring the Money Advice Trust and RCPsych to review the research in this area and look at any gaps. He offered to talk about what comes out of the research at a future meeting.

• Robert Skinner, Banking Code Standards Board, stated that the Banking Code places significant obligations on banks, which the banks have no excuse not to be carrying out.  The Board is looking at the Money Advice Liaison Group guidelines at the moment.  Mr Skinner noted the findings by Mind of people not disclosing their mental health problems to creditors and asked what more the mental health sector can do to help in this area.  Emma Mamo said that additional information on access to financial advice, which Mind will provide on their website, and showing that banks are not always the enemy are both key. This prompted a query from Lynne Jones about how compliance to the code is monitored. Mr Skinner said that the Board has a close relationship with advice bodies to investigate cases and with the media and politicians on issues that are raised to them.  There are also regular theme reviews. Sandra Quinn added that, as an independent body, the Board is much more effective than industry would be if it tried to tackle these issues without the Board.

• Joel Lewis, Consumer Credit Counselling Service, noted the user of mental health services’ point about those with mental health problems requiring access to advice at times convenient to them, and highlighted the ways the CCCS are addressing this.  Mr Lewis added that health professionals are not equipped to offer financial advice but that CCCS wants to work with partners on this and offer, for example, training. He asked for views on debt as a trigger for mental health problems. Emma Mamo said that the relationship between debt and mental health is of a complex, circular nature.  Most important is that support is available and there are safe environments with which to talk in. Peter Tutton added that advisers need to make sure that people with debt aren’t overly stressed and that creditors need to take a more positive and proactive approach to mental illness.  Lynne Jones commented that the issue of stigma prevents people from engaging and this is something we need to address.

• Alison Davies, netCUDA, commented that credit unions do get lots of people who struggle with high street banks and offer a more personal service. However credit unions need financial backing to be set-up and local authorities often don’t have money to spare. In addition, FSA regulations mean that credit unions need to be more professional and serve a large number of people, which makes it harder for them to be sustainable. Ms Davies added that whilst it is important to ensure there is sufficient funding for mental health services to help access, there needs to be support for the right services to be there in the first place. 

• Paul McCarron, APACS returned to the issue of stigma and said that trade associations, including APACS, can do more to with their members to ensure that clients with mental health problems do not have to explain their situation every time they are in contact with their creditor. Creditors could get on with flagging up those with mental health problems now. Lynne Jones mentioned the problem of confidentiality and a way needs to be found to take this into account.

• Clare Ockwell, CAPITAL, said that mental health assessments always ask about issues such as sexual abuse, but never money issues. Ms Ockwell suggested that it would be good if mental health assessments cover these points. She added that there should be greater money advice outreach in community and healthcare settings.

• Jonathan Naess, Stand to Reason, said that there is a parallel between stigma and discrimination of those with mental health problems in the financial sector with stigma and discrimination in the workplace.  As an employer might back off these issues if they do not know how to engage with them, there is a danger than creditors could do the same.

• Helen Dupays, The Prince’s Trust, mentioned the Prince’s Trust’s work on financial awareness and mental health of young people.  Ms Dupays noted that her organisation had changed its business plan to reflect the need to help the wellbeing of young people.

Close

Lynne Jones brought the meeting to a close by thanking the speakers and thanking guests for attending.  Lynne Jones suggested that it might be worth organising a follow up meeting in around 12 months time to discuss how the issue of debt and mental health has progressed.

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