Summary
This briefing, authored by Clare Lally for the UK Parliament, explores the relationship between consumer debt and mental health. It discusses how debt influences well-being, highlighting systemic and personal factors contributing to “problem debt.” The report also evaluates existing support systems, including government schemes and the role of non-profits, while offering policy considerations to integrate financial and mental health services.
Key Take Aways
- Two-way Relationship: People with mental health issues are three times more likely to experience problem debt.
- Vulnerability: Over 24% of UK adults show financial vulnerability, with low-income groups disproportionately affected.
- Problem Debt: Citizens Advice estimates 5 million UK residents face deficit budgets, a 54% increase since 2020.
- Suicide Risk: Over 420,000 individuals with problem debt in England contemplate suicide annually.
- Support Programs: Initiatives like the Mental Health Breathing Space Scheme provide temporary protection against debt collection for those in crisis.
- Access Barriers: Many individuals avoid or delay seeking debt advice due to stigma, lack of awareness, or difficulties in accessing services.
- Data Sharing: Stakeholders advocate for improved data-sharing among creditors to reduce administrative burdens and improve support.
- Policy Proposals: Suggestions include integrated debt-mental health services, training for healthcare professionals, and improved financial resilience strategies.
- Technological Solutions: Financial technology can assist in safeguarding vulnerable consumers through spending controls, alerts, and risk prevention mechanisms.
- Legislative Frameworks: The Consumer Credit Act, Equality Act, and Mental Capacity Act establish regulatory safeguards for consumers with mental health challenges.
Innovation
- Integrated Interventions: Programs like the Space for Money Worries integrate cognitive behavioral therapy with debt support.
- Digital Platforms: Tools to disclose support needs to creditors improve coordination of financial and mental health services.
Key Statistics
- 47% of UK adults reported vulnerability characteristics in 2022.
- Over 1.7 million individuals seek debt advice annually.
- The Mental Health Breathing Space Scheme saw a 33% increase in registrations in 2023.
- 58% of individuals in problem debt report high anxiety levels.
Original: LINK
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