OFT issues guidelines on mental health and debt

Debt is a really common phenomenon in the current economic climate and there is growing evidence that debt and mental health problems are linked. The truth is that mental health problems can be a reason for, and a symptom of, being in debt.

Those who lack the capacity to make informed decisions because of mental health problems can find themselves with debt that they can't afford. The Office of Fair Trading (OFT) recently issued guidance to lenders and recommends lenders take responsibility for assessing the mental capacity of anyone who applies for credit.

Similarly, being in debt, or having debt problems, can cause mental distress, such as depression and anxiety. It is reported in The Independent today that research by the Consumer Credit Counselling Service (CCCS) indicates that nearly nine in ten of the people it helps with 'significant debt problems' appear to be suffering with some kind of mental distress, such as depression and severe anxiety. CCCS recommends these people seek help from their GP.

Banks are taking the issue seriously and are now setting up special 'mental capacity and health units' within debt collection teams to avoid unfair lending or debt collection practices towards those with mental health issues.

A spokesperson for debt management company Gregory Pennington commented: "If debt is causing you emotional distress, talking about the problem could relieve some of the burden. A debt expert will be able to offer guidance on the next steps you could take to get out of debt."