Archive for the ‘mental health’ Category

New Lending Code 11: mental health, MALG guidance

November 23, 2009

183. Further and more detailed good practice guidelines have been produced by MALG and are available at: http://www.moneyadvicetrust.org/download.asp . The MALG guidelines will not be monitored and enforced by the Lending Standards Board. [Reproduced with the kind permission of the British Banking Association -see link below]

Because I had read many of the documents some time ago, and not got round to all of them, combined with a period when my attention had to be elsewhere, I had confused the guidelines with the submission to the 2007 review of the Banking Code, and both with some parts of the Consumer Protection Regulations.

Albeit, I have this clear now and apologise should I have attributed rule and regulation to a document which it is not in. But the effect of my comments is unaltered.

While the guidelines are given a somewhat detached status, since they are to be neither monitored nor enforced by the standards board, they remain specified good practice. As such they will figure in considerations of the actions of creditors and debt collectors in other places, and cannot be ignored.

The guidelines were of great value when they were published in 2007. While they are not directly included in the Lending Code they are, by this paragraph, made best practice in carrying out the previous 10 paragraphs. This is an invaluable advance for those affected.

While there is no mention of the other vulnerable debtors – elderly and poor – in the new code or in the guidelines, their link in the CPRs should leave no creditor in any doubt that similar care is required for them.

There are 15 main heads in this document and invaluable additions, such as a listing of relevant mental conditions.

In my judgement they leave creditors for no excuse to behave inappropriately in relation to those suffering, once the creditor has been advised of the condition involved. Nor, indeed, against those who fall into the other two vulnerable groups. I would add more to the vulnerable areas.

This is because of the extreme unbalance in the ‘playing field’ between the enormous companies and the defaulting individuals who have no experience or knowledge of the area. For that group of scurrilous companies – some of the biggest of banks – who follow an aggressive  path, I feel these regulations still lack the teeth that are needed to protect.

Well, I suppose these gripes are part of my shopping list for the next reviews in all areas!

That said I believe thanks and congratulations are due to all those who have worked extremely hard over many years to make these new paragraphs and  their guidelines part of the body of rules.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk
The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

Advertisements

New Lending Code 10: mental health, court action

November 20, 2009

182. The subscriber should also only initiate court action to pursue the debt as a last resort and when it is appropriate and fair to do so. [Reproduced with the kind permission of the British Banking Association -see link below]

The only time I can see that court action is justified is where it can be clearly shown there is BOTH ability to pay AND wilful avoidance of resolving the matter on the part of the debtor.

Whatever the history of the creation of the debt – and there can be more than one side to this – the issue at the collection stage is about both the position of the debtor, and the reasonable actions to determine resolution.

Now bear in mind that resolution may be achieved in many ways. The debt may be completely written off, without any call on the debtor in the future. It may be frozen on any basis from not chasing it at all, to regular contact; here the intervals of contact should relate the fact that freezing is going to be a response to small likelihood of payment. Annual contact should be sufficient.

There may be token payments, of say £1 a month. But here the use of this should be sparing, as this can cause problems for poor and disabled debtors. It is likely that the debtor has more than one creditor. Not only may the total pounds be noticeable, but the costs of paying can add 50 percent or even more.

The Debt Management Plan is not available where monthly repayments total less than £100 a month. At lower figures there is no way of using an intermediary, including charities, to distribute the total repayment.

Where there are a number of creditors it would be a good move for creditors to organise a clearing house for these payments. And that would permit something even more in keeping with fairness.

A debtor is generally required to treat all their creditors equally. But if only a pound or two a month can be afforded it is hard to divide; unless there is a clearing house that gathers many such payments, doing the computer-easy calculating and accounting, and passing sums on in bulk to the appropriate creditors.

It isn’t brain surgery. And not even rocket science!

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

New Lending Code 9: mental health, debt agencies

November 19, 2009

181. If a subscriber has received appropriate and relevant evidence of a customer’s mental health problems they should consider whether it is appropriate to pass or sell the customer’s debt to a third party debt collection agency. [Reproduced with the kind permission of the British Banking Association -see link below]

I can see no justification whatsoever for a creditor using an agency or selling the debt on once it is aware the customer is in the vulnerable groups. Certainly in the vast majority of cases hectoring is not what is required, even less the harassment, worry and fear of these crude methods.

Much, much more is likely to be achieved by a sympathetic and supportive approach. I wonder about the decision making process that has developed the current blind and thoughtless path.

By the very nature of their situation few vulnerable debtors are likely to be in a position to clear a debt immediately. And often their incomes are so inadequate that it is unlikely recovery of the debt is likely.

Where that is the case all blindly cold processes are pure waste of money. At best they are deliberately cruel, and at worst actually sadistic. The latter is in itself a mental health issue, as it happens – but this time on the other side of the debtor-creditor divide.

Of course not all vulnerable debtors are in poverty or poor. But where the only assets are a house, or the means of getting through their day without difficulty, pursuit raises issues of human rights.

Far better, then, to approach all such cases with skill, knowledge, understanding, and sympathy. This form offers support to just that.

At the same time it should not be turned into a requirement in all cases. Where it can contribute and their is agreement to use it is, without question, an invaluable aid in working out the best course of action.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

 

New Lending Code 8: mental health, DMHEF evidence form

November 18, 2009

179. The Money Advice Liaison Group (MALG) has produced a Debt and Mental Health Evidence Form (DMHEF) which provides a standardised methodology for advisors and creditors to share relevant information about the customer’s condition from health and social care professionals. [Reproduced with the kind permission of the British Banking Association -see link below]
180. Subscribers are encouraged to consider the DMHEF if it is presented by the customer or their adviser (with the customer’s consent). [Reproduced with the kind permission of the British Banking Association -see link below]

I am not a great one for forms. I find them limiting rather than liberating, and often used to avoid real thought by creditor representatives. Filling them in is often a battle of understanding the intentions of the setter, and wondering if the reader will understand.

However, if kept relatively simple and used as a basis for discussion, thather than an avoidance, a well designed and focussed one can contribute greatly.

And this form is on pointedly directed at cases where the debtor has a number of professionals involved, and enables a gathering of information to advise the debtor on suitable action.

It has been developed by the Royal College of Psychiatrists for MALG to support the MALG guidelines. It is available from http://www.moneyadvicetrust.org/content.asp?cid=88  (adviser version) and http://www.moneyadvicetrust.org/content.asp?cid=89 (creditor version), with  advice on how to complete the form here  www.cml.org.uk/cml/filegrab/GuidanceFinal8808.pdf?ref=5990 .

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

Get the DMHRF here http://www.moneyadvicetrust.org/section.asp?cid=53
The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

 

New Lending Code 7: mental health, time allowance

November 17, 2009

178. If a customer informs a subscriber that they have a mental health problem that is impacting on their ability to manage their financial difficulties, the subscriber should allow the customer a reasonable period (e.g. 28 days) of time to collect and submit relevant evidence to the subscriber. This evidence will help the subscriber to work with the customer,
advice agencies and health/social professionals where appropriate to determine the most appropriate action to deal with the customer’s financial difficulties. [Reproduced with the kind permission of the British Banking Association -see link below]

How one can be both happy and unhappy with  a provision at the same time!

The idea that vulnerable debtors need more time is made very plain by this paragraph, and leaves  debtors with no excuse for placing unreasonable time limits on them.

But the example of time is not realistic.

Bearing in mind that most debtors with problems are able to quickly arrange a new schedule with their creditors, and the number who have to take time or make explanations is relatively small, there is no real reason for hurry in this kind of case.

Indeed the use of harassing techniques is a costly piece of unkind futility.

In the normal course of events 28 days is not unreasonable for provision of detail information. Often debtors are lucky  to have routine responses from creditors in less time.

Unless there is good reason to act otherwise, I always advise that debtors should insist of communication by letter. There are many advantages, which I discuss in my book, and for some – and for many on occasion – the very act of putting something in writing, or collecting it together, is a difficult and slow process.

To a creditor this can look like deliberate procrastination; a strong reason this paragraph is so valuable. Only a specialist staff can actually understand – and it will take experience for them to do so fully – why there is nothing suspicious in delay in some conditions.

But even with these problems many people will want to manage their own affairs. So there is not easy fix of turning all these cases to intermediaries. Indeed, with the best will in the world, intermediaries can be just as lacking in understanding. And they can be too pressured to spend the time that is needs to represent properly.

So, while calling for the training of specialist staff to be a requirement, I welcome this contribution to a better experience for vulnerable debtors.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

 

New Lending Code 6: mental health, specialist staff

November 13, 2009

177. If a subscriber has specialist staff to deal with cases of debt and mental health problems, they should ensure that appropriate mechanisms exist to refer the customer to the appropriate support. [Reproduced with the kind permission of the British Banking Association -see link below]

This is an excellent emphasis on the need to have training to deal with mental health issues, and indeed other issues of vulnerable customers. But the idea that staff who are not trained should deal with them is not a good position.

The mental health field is vast, and understanding the effects and potential effects of particular disorders requires considerable attention. Even more important is the question of the effects of the stress of harassment which is more or less normal in collection procedures and creditor behaviours.

The great value of this section is the fact it has been introduced to the code, which removes the prior behaviour. That behaviour consists mainly of a challenge as to its truth, should anyone reveal to the agent that there are mental health problems.

This discourages the more timid or, for example, any debtor in depression or – as is normal – in shock, from revealing the need for great care to be taken. Apart from the effect being counter-productive to the purpose of collection departments, it can have serious effects in deepening a mental condition.

So I hope there will be strenuous efforts to ensure all in the credit field observe both the letter and the spirit of this new entry into the code.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

 

New Lending Code 5: mental health, information recording

November 12, 2009

176. With a customer’s explicit consent and in line with requirements of the Data Protection Act, where it is possible and appropriate subscribers should record relevant information about the customer on their account so that staff can deal appropriately with the customer.  [Reproduced with the kind permission of the British Banking Association -see link below]

As happens so often with different advances in civilised behaviour there is some conflict between different needs. I doubt whether, in this situation, there is a great problem between ensuring there is adequate information on file, and observation of data protection and privacy.

What is perhaps more interesting and important is both how that information is flagged, and how staff are trained to respond to it.

There is already a very intrusive approach to personal information gathering by creditor staff. Financial and health information, addresses, phones, relationships and family are all demanded as of right with little more confidence given the debtor than a rather loose code requirement and the Data Protection Act.

While there will be great annoyance and publicity at any breaches, we already know how much disc-stored information is either hacked or stolen and sold on. We have no real assurance about staff filtering or training, and even less about the policies and their implementation by creditors.

These considerations are multiplied where we find also that on transfer to a debt collection organisation the creditor is under no obligation to transfer important information, and a whole new – and potentially even less secure storage system – is made free to request and store all that information again.

So I urge on the BBA and the Lending Standards Board, as well as the OFT and the FSA to give great thought to the care which is needed in this, the procedures and requirements for the creditor and all agents, and the idea that it is right, as a routine, to expect debtors to repeat their information when it is already on file.

All that said, the addition of this is a support for the intent of the section, and is to be applauded.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

 

New Lending Code 4:mental health, third parties

November 11, 2009
175. Where it is appropriate and with a customer’s consent, subscribers should work with advice agencies and health and social care professionals in a joined-up way to exchange information and ensure an effective dialogue. [Reproduced with the kind permission of the British Banking Association -see link below]

Many creditors, and some debt collectors, may well prefer to work with representative agencies. Always much easier to work to a routine and have someone else work out the details, and do all the questioning and examining.

Especially if that intermediary, that third party, because of its own pressures, needs to pigeonhole and classify elements of the debtors finances and problems.

Often this is presented as a requirement. To my mind this is disgraceful, and a breach of the terms under the defunct Banking Code, the new Lending Code and under the Consumer Protection Regulations.

Of course this third party representation can work sometimes for the debtor. But many cases have unique elements that are quite difficult to satisfactorily understand, let alone resolve.

For that reason among many others, such as the individual’s rights in a democracy, it is important that the right to represent oneself is again emphasised.

By implication the institutions are told that they are dealing with an individual, and that individual will decide whether to use an intermediary or not.

Notice also the reference to a ‘joined up way’ and ‘effective dialogue’. One hopes this is more effective that Tony Blair’s joined up government. But putting that humour aside, it does mean that the obligation is on the creditor to ensure proper collection of information and making inclusive judgement after all the to and fro discussion.

Creditors are also, by implication, required to inform themselves on mental health issues. This is why a specialist department for the vulnerable cases is not just a good idea, but sound practice. The creation of such departments should be treated both as a matter of urgency, and enforced by the OFT.

Joseph Harris, Debt Control Man

Author: Control Your Debt Crisis on Your Own Terms

http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758

The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp

And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

New Lending Code 3: mental health, responses

November 10, 2009
174. The appropriate response will differ in each case and could involve a range of approaches, including:
• working positively with an advice agency
• promptly carrying out agreed actions
• being flexible in responding to offers or schedules of repayment
• sensitively managing communications with the customer (for example preventing unnecessary and unwelcome mailings). [Reproduced with the kind permission of the British Banking Association -see link below]

 

Paragraph 174 has some useful pointers to the creditor on how to handle its dealings with vulnerable debtors.

These terms: ‘positively … promptly … flexible … sensitively’ give a clear indication of the manner in which companies should gear these particular contacts. This is in sharp contrast to the normally aggressive and harassing manner of most debt collection departments and debt collection agencies.

Sensitive in the context of this matter is defined as finely aware of the attitudes and feelings of others [The Penguin English Dictionary].

While I suggest the companies rethink their whole collection procedures in light of this advice, it will be a big advance if they do so at least for the vulnerable. Since the Consumer Protection Regulations already feature the idea of differences of approach to vulnerable consumers, there is now no excuse for creditors not making this policy for their internal procedures.

Those who prefer to handle their own affairs should note that the use of advice agencies remains an option, not a requirement. While the specialist charities do know their own fields, and offer more awareness, you should be careful about the awareness of any intermediary over your own situation.

Never allow yourself to be harassed over this by agents. Remember it is not your job to make the companies’ lives easier, but to get fair treatment – and to yourself behave fairly!

If companies fail to show this level of care in a case of mental health disorder they should be reported to the monitoring agency – The Lending Standards Board. If you feel the matter is serious I suggest you also report it to the Licences Section of the Office of Fair Trading.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758

The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp

And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

How Will the New Lending Code take effect?

November 9, 2009

One can probably trace the genesis of the new Lending Code, from FSA bombshell about taking over the Banking Code, to realising parts belonged under the OFT, to realising that means rewrites, to thinking the best people to write it would be the current possessors, to conveying that information and then to actually confirming.

Only after that could the British Banking Association deal with the severe truncation of its code and the Lending Standards Board, as the prior Banking Code Standards Board is now known, start reorganising.

It was a severe disappoinment to me that he result of this meant the code was not ready for examination and comment long before it came into effect. Indeed it was not in sight until the moment of becoming The Code.

So it is no surprise to any of us if understanding how the changes in it will be worked is not yet extant.

In my discussions with the FSA, the BBA and the OFT – I have not attempted to ask the FOS yet – I have asked the following questions and made the following points.

1. How will the mental health section, pars 173-183, which is entirely new and very important for affected debtors, apply to existing cases

2. It seems likely that a court would interpret its application to an existing collection at any point of change; but what would be the relevant criteria for ‘change’?

3. Where a complaint has reached final response and is then either on its way to or with the FOS how does the FOS utilise pars 173 to 183. There are many ways to do this, including returning the complaint to the creditor or agent with instructions to reconsider it in light of the new pars.

4. In par 183 reference is made to the MALG advice of 2007 as further guidelines, virtually bringing the whole of them in to the code. These are about all vulnerable debtors ]probably including borrowers whether in financial difficulties or not. As this ties in firmly to the CPRs on vulnerable customers, adding a definition in part, to what extent are all vulnerable debtors assisted by the new paragraphs.

5. As the OFT is the enforcing agency, the FOS, and all debtors and their advisors, will need to know your position on them. Will you advise when the necessary advice is issued, and give details of that advice?

I would point out that the creditors, as large and powerful institutions and with various industry bodies, lobby intensively both on legislation, rules and codes, as well as interpretations. While there are seriously over-stretched charities who represent debtors they either do not specialise or are not big enough to offer a strong countering voice in this area.

6. The voice of the actual debtor is simply not heard and his lobby is weak. Even the ombudsman, the FOS, is actually funded by the industry, and its influence is very clear in process.

7. Through the credit licences the OFT has considerable power to ensure better observance of rules and a more balanced judgement by the FOS; yet from the debtor’s point of view that power is used very lightly.

8. The OFT is the body upon which the debtor must rely to make sure the rules there are effective. This is a matter I will return to.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk