Banks urged to ease debt worries of people with mental health problems

Banks urged to ease debt worries of people with mental health problems

According to Mind, which surveyed 1,800 people about the impact of financial strain on their mental health, 91% of respondents said money worries worsened their mental health; and more than half of people with problem debt (56%) ran out of cash for basic provisions most weeks.

Its report, In the Red, revealed people with mental health problems are three times more likely than the national average to be in debt - often triggered by low income or lack of employment due to stigma or ill-health. As a result many vulnerable people turn to doorstep lenders who charge interest rates as high as 400% out of desperation, the report concluded.

Mind wants high street banks to do more to lift the pressure on people with mental health problems after its research showed when creditors were told by people about a mental health condition 83% continued to be harassed about debt repayments.

The report recommends better training for bank staff as well as a "flagging" system where customers can opt to have erratic spending patterns alerted. For example, people with bi-polar disorder often spend extravagantly while in a "manic" phase and are four times more likely to be in debt than the average.

By working with individuals to monitor difficult periods, banks could.....continued below

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"People living with mental health problems are particularly vulnerable to being trapped in a cycle of debt and poverty," said Paul Farmer, chief executive of Mind.

"Changes in practice such as waiving fees when a customer has been too unwell to manage their finances and introducing mental health awareness training for staff will make all the difference."

A spokesman for the charity added that some banks are "leading the way" on best practice but said more could be done across the sector to limit the impact of debt pressures in the months ahead as household finances are stretched further by the global credit crunch.

"What we are asking for is more awareness of the issue within the banking sector," the spokesman added.

"There are positive things happening. For example, the Financial Services Authority funded a new section of our website specifically to do with managing money. However, there is no doubt that the credit crunch has made the problem all the more urgent."

A spokeswoman for the British Bankers Association said: "Banks treat all cases of financial difficulty sympathetically and will try to help customers by agreeing a way forward and providing sources of free and independent money advice. The new edition of the banking code also means banks take a more positive and proactive attitude to helping customers with financial difficulties by offering help and support before debt becomes a serious problem.