Brian Semple, Head of External Affairs, Money and Mental Health
World Mental Health Day: Lenders back our call to Stop the Debt Threats
10 October 2019
When we launched our Stop the Debt Threats campaign, we were delighted that over 30 national organisations from across the mental health and debt advice sectors backed our call for the government to put an end to intimidating debt letters.
Our research shows that the intimidating and obscure language used in these letters – coupled with the threats of court action they often contain – can leave people in problem debt feeling panicked and hopeless, or even contribute to them becoming suicidal.
It’s perhaps unsurprising then that mental health and debt charities were keen to back the campaign. After all, many of them see firsthand the damaging psychological impact that debt letters can have, especially for people struggling with mental health problems as well.
Concerns about debt letters among financial firms
But since launching the campaign, we’ve been struck by the enthusiastic response we’ve had from what might seem a more unlikely source: the lenders who send debt collection letters. Time and time again, people working in financial firms have told us that they know these letters are a problem, and that they’d like to change them.
The problem is, however, that lenders have their hands tied by the out-of-date rules in the Consumer Credit Act (1974), which force them to use chunks of intimidating and confusing text in their debt letters. This is intended to ensure people in debt know their rights and how to get help, but instead it’s causing real distress.
For example, the rules make firms include phrases like:
“IF YOU DO NOT TAKE THE ACTION REQUIRED BY THIS NOTICE BEFORE THE DATE SHOWN THEN THE FURTHER ACTION SET OUT BELOW MAY BE TAKEN AGAINST YOU [OR A SURETY].”
And advice like:
“YOU CAN APPLY TO THE COURT WHICH MAY MAKE AN ORDER ALLOWING YOU OR ANY SURETY MORE TIME.
“IF YOU ARE NOT SURE WHAT TO DO…YOU SHOULD CONTACT A SOLICITOR.”
But the reality is that most of us don’t know what a ‘surety’ is, or how to apply to a court, or have access to a solicitor. The most useful thing that you can do if you receive one of these letters and can’t make your repayments is to contact a debt advice charity. But the law dictates that even if lenders include this important signposting to help, it cannot be as prominent as the intimidating messages above – which must be in bold, capitals or in red to stand out. With many people receiving multiple letters like this every day, it’s no wonder that so many are left feeling confused and frightened.
Some lenders are nonetheless trying to improve their letters, for example by changing the parts of letters they are allowed to edit to make them more friendly. We’ve also heard examples of firms sending additional ‘wrap-around’ letters along with their debt collection letters, with more supportive messaging and clearer information about how people can help to deal with their debt.
But unless the government changes the rules on debt letters, lenders are limited in what they can do to improve their debt letters.
Lenders back our call for change
We’re really excited then that to mark World Mental Health Day 2019, four leading banks and building societies have joined our campaign calling on the government to act on this problem. Barclays Bank, Nationwide Building Society, Monzo Bank and Metro Bank have all signed a joint statement – firstly pledging that they are taking steps to improve their debt letters, but secondly calling for the government to change the rules so that they can do much more to make letters more supportive and easier to understand. As the four financial firms say in their statement, that would not only enable them to help more people deal with their debt, it will also save lives.
We now have a cross-sector consensus among charities, mental health organisations, debt advisors and even creditors that the rules on debt letters need to change. We also have the support of around 11,500 people who have signed our petition calling for the government to act. Over the coming months, we will be continuing to turn up the pressure on the government, so that we can put an end to the unnecessary psychological harm that #DebtThreat letters cause.