Threatening bank debt letters damaging mental health, charity warns

Adam Williams
debt mountain

Threatening debt-chasing letters sent by banks to struggling customers risk damaging the mental health of the vulnerable, a charity has warned.

The Money and Mental Health Policy Institute has described the tone of many letters as “thuggish” and called for the wording to be changed.

There are fears that thousands of people will slide into debt as a result of the coronavirus pandemic. When chasing debts, the Consumer Credit Act requires banks include certain phrases and demands in letters to indebted customers.

These letters, which can threaten court action and property repossession, have been described as “complex and intimidating” by the charity. It said that in England about 100,000 people in problem debt attempt suicide each year, with intimidating debt letters a key factor.

Those with large debts may be receiving several letters a day. The Institute is calling on the Government to change legislation and reduce the threatening nature of these missives. 

Tina Newbury-Smith, 51, is a carer for her autistic son and fell into £30,000 of debt after using credit cards to pay for his care. Mrs Newbury-Smith, from Essex, is a former City trader but was forced to give up work to care for her son. As the family’s household income fell, debts soon began to mount. 

“It was a bit of naivety on my part,” she said. “We have quite a bit of equity in our house so I thought we would be able to remortgage, but the fact I wasn’t working anymore meant we couldn’t do that. We were stuck with credit card debt and no way to pay it.”

Mrs Newbury-Smith said the debt-chasing letters were a key reason she began to suffer from depression.

“The relentlessness of the chasing just broke me,” she said. “The tone and frequency of the letters made me avoid the problem. You stop opening them and then there’s other letters you’re missing. It creates a debt vortex that you get sucked into.”

Some banks have taken steps to temper the impact of debt letters. Monzo, the digital bank, adds a disclaimer at the top of its debt collection emails which apologies for the harsh tone used. 

Numbers to call

A spokesman for UK Finance, which represents banks, said: “The industry recognises that the current requirements can be confusing and off-putting, especially when customers and lenders have agreed changes to contractual payments, which is why we support changes to the legislation in this area.”

Since the start of the coronavirus outbreak, banks have been forced to offer payment holidays to customers with mortgages, credit cards and loans who are unable to repay. However, in many cases they will still send debt-chasing letters to customers in arrears, the charity said.

Any change to the Consumer Credit Act would need to be approved by Parliament. A spokesman for HM Treasury said: “We are aware of the concerns raised and are looking into the issue carefully.”