The statistics vary as to the extent of mental illness in Britain. Nevertheless whatever the exact figure, it clearly indicates an issue that needs to be addressed by all parties dealing with recovery of debt. It is therefore important that creditors are able to understand and deal with these borrowers in a manner that ensures that the various principles of TCF and regulatory guidelines are met.
The Money Advice Liaison Group has produced a guide for creditors entitled “Mental Health Good Practice Awareness Guidelines” which can be accessed at www.moneyadvicetrust.org
This recommends that a Debt and Mental Health Evidence Form (DMHEF) is completed by the borrower’s advisers. It is accepted that this is a matter for the advisers rather than the creditors and that this may involve education of the advisers in this area. The advantage though will be to assist the lenders in establishing those genuine cases that deserve the full strategies to be employed rather than those false cases. The form will identify:
A. The identity of the mental health problem
C. Summary of the matter
E. How it affects their ability to manage
F. The effect on the borrower of debt recovery action.
It is advocated that creditors should consider their processes and systems to ensure they can respond when aware “explicitly” that there are mental health problems. It is accepted by all parties that “explicit” awareness may be open to interpretation. It does though suggest that when aware, the creditor should try to collect the DMHEF. Then they should be in a better position to assess ability to deal and the borrower’s preferred method of communication. It has to be remembered that it does not necessarily follow that mental illness means the borrower cannot deal with the matter, and each borrower’s case should be dealt with on its own particular circumstances.
The creditor though, should deal appropriately and sensitively manage such cases. Most creditor organisations have set down codes of conduct for such borrowers and, at the very least, this suggests that there is a need for training of staff so that they can identify and deal appropriately. A good suggestion is, that if a creditor has specialist teams dealing with these matters, they cascade their experience to all members of the team.
This type of information does raise Data Protection issues. Such information is considered to be sensitive personal data and can only be processed if the data subject has given his explicit consent. If processing this information you need to therefore ensure that data protection provisions are met. The word ‘explicit’ as mentioned above is not clear. Although indications are that verbal consent would be acceptable, this would need to be recorded.
After recording, it would be important after recording to make sure there are flags to show regular review and the sensitivity of the matter.
At any time a borrower can add details of mental illness to a credit reference report which creditors should check. There is standard wording that can be used as follows “I currently have mental health problems that might affect my ability to manage my credit commitments.”
If such a mental health problem is identified, the guidelines suggest allowing a reasonable time period of 28 days to gather evidence. This is based on the fact that, when a DMHEF is issued, the borrower has 21 days to review.
The guidelines do ask creditors to adopt a sympathetic approach to interest etc. Furthermore, that when aware of these, to consider court proceedings as a last resort. The problem faced is that many such borrowers fail to let their advisers know of their problems as their concentration is focused more on their health. Also, the borrowers may refuse to reveal to the creditors the details of their advisers etc. The best communication strategies will need to be utilised in these circumstances. It does have to be understood that, without such co-operation there is no explicit knowledge of the problem. It is hoped though, that with the publicity, training and guidelines issued, more and more advisers will utilise these forms and full collaboration can occur.
At IM, training is given to all staff in identifying such cases and making sure the appropriate action is taken. As always, the teams are more than happy to “cascade” their knowledge to any lenders.
Myra Scott, Partner, Glasgow