Newsbite article

Regulating spending during periods of poor mental health

The Money & Mental Health Policy Institute (MMHPI) is a new organisation founded and sponsored by Martin Lewis (Money Saving Expert). MMHPI launched a report “In control- regulating spending during periods of poor mental health” on 13 July 2016 to encourage focus on increasing help for individuals who have mental health issues that make managing their finances difficult.

One of many reasons people with mental health problems often end up in financial difficulty is because they struggle to control their spending when unwell. The vast majority of higher spending could be categorised by the term ‘crisis spending’. We define this as spending behaviour which:
  • Occurs during a period of poor mental health
  • Is motivated by emotional or psychological needs and processes, rather than material need, and
  • Causes some form of financial detriment – including debt, debt crisis, or savings depletion.
In-Control-(3).pngCrisis spending may manifest itself in different ways or be driven by different psychological or emotional needs and impulses. Key warning signs are a large number of transactions in a short period of time and increased spending late at night.

The MMHPI report doesn’t try to absolve the individual for responsibility for their spending but recommends setting up controls that individuals can arrange in anticipation of future periods of poor mental health. It’s main proposal is to allow these individuals to self-set limits on their credit & spending when in good mental health which organisations would keep to during a crisis spending phase. These would be binding on both credit providers and the individual themselves. For example, a voluntary notice on their credit record that they should be refused new credit during a crisis spending phase.

The report is very welcome as self-set spending or credit limits are also a potential solution for other potentially vulnerable situations such as housebound customers, customers who need a trusted third party to take over paying bills etc. in an emergency and customers who are victims of financial abuse. There are significant consumer protection and technical challenges to tackle but we look forward to working with MMHPI and other interested parties to better support these customers.
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James O'Sullivan

Policy Manager

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