Mental health and debt collection: a story of progress?

In recent years there has been growing recognition of the toxic relationship between money and mental health. This has led to increasing regulation of creditors and debt collection companies to ensure they are treating all customers fairly, especially those people who have mental health problems or are in other ‘vulnerable’ situations.

But until now there has been relatively little evidence to demonstrate whether such changes have had any real effect. In our new paper, which has just been published in the Journal of Mental Health, we begin to fill this evidence gap.

Way back in 2004, my colleague Prof. Elaine Kempson identified a need in her Independent Review of the Banking Code for financial firms to do more to understand how they support customers with mental health problems.

Since then, there appears to have been lots of activity to tackle this issue, both within firms themselves and from outside organisations that have committed to produce guidance and training for frontline staff working in financial services firms. (I won’t go into detail here about the numerous organisations involved in this work though — if I did, I’d very quickly hit my word limit!)

There have also been changes to financial regulation that have forced regulated firms to look into this issue in more depth. Since the Financial Conduct Authority (FCA) took over responsibility for regulating the consumer credit market in 2014, for example, firms have been required to implement policies and procedures to ensure the fair and appropriate treatment of customers in vulnerable situations, which includes those with mental health problems.

But, despite lots going on in this area, there’s not much evaluation of what impact, if any, these changes have had on frontline staff.

A comparison between 2010 and 2016

That’s why I’m really happy to present new analysis in the Journal of Mental Health, which considers how the attitudes and practices of staff working in debt collection have changed between 2010 and 2016 in relation to customers with mental health problems.

The analysis looks at two surveys of debt collection staff: one conducted by my colleague Chris Fitch and Ryan Davey in 2010 (while working for the Royal College of Psychiatrists) with 1,270 staff in 19 organisations; and one conducted by Chris, myself and colleagues at PFRC in 2016, which involved 1,573 staff in 27 organisations.

In the paper, we compare the results for 2010 and 2016 based on 12 survey questions which were asked in both years. We do this both for our overall sample and also for a smaller sub-sample of six firms that participated in both years the survey was run.

A story of progress?

In simple terms, we found statistically significant differences between the two years and these changes could generally be described as positive ones.

As shown in the figure below, across the industry, staff attitudes to working with customers with mental health problems appear to have become ‘better’, with only the second statement appearing ambiguous:

Reported staff practices when a customer or third party discloses information about their mental health also seem to have improved, especially in relation to the way in which they record information:

All of these differences remain statistically significant even when controlling for staff experience in the industry, whether they are a specialist member of staff or not, and the type of firm they work for (Debt Collection Agency/Debt Purchase Agency or a creditor with ‘in-house’ collections staff). The direction of the relationship also appears to hold true when looking just at our sub-sample of firms that participated in both years, which does suggest that the changes are not simply the result of different firms taking part in the different years.

Reasons to be cautious

Our paper can certainly conclude that the reported attitudes and practices of staff working in debt collection appear to have improved since 2010. This is good, but further research is still needed to be sure. There are a few reasons to be cautious:

1. Self-selecting sample — in both waves only firms that volunteered to take part did so, meaning there’s a danger that we only surveyed those who care about mental health already. We tried to mitigate this by highlighting the research as an opportunity for firms to improve.
2. All mental health problems are not the same — in the research unfortunately we could only ask about ‘mental health problems’ generally. It’s therefore not clear whether the views and practices of debt collection staff vary depending on the type of condition that the customer has.
3. We can’t tell why changes have taken place — unfortunately this study isn’t an evaluation of any single intervention, which means we can’t say for sure why the changes have taken place. They could be the result of FCA regulations, increased training, or even just a wider societal shift in how people with mental health problems are viewed. In reality, it’s probably a bit of everything!
4. Other types of debt collection — our focus was on firms that are regulated by the Financial Conduct Authority. Other organisations, particularly Local Authorities, are also involved in debt collection activities. Things may not have got better in these other markets.
5. What’s the actual effect on consumers? — clearly the research gives us the perspective of frontline staff, but it doesn’t tell us much about the experiences of consumers. I would therefore urge firms to grant researchers more access to their internal data on customer outcomes and maybe even allow them to talk to or survey the customers themselves.

All in all, our research is a good start in unpacking the ‘black box’ of debt collection. The results also suggest that a good start has been made in improving the treatment of customers with mental health problems in the UK. Further changes — and further evidence — are required though to ensure that this good start doesn’t falter.

If you work in an academic institution you can access our journal paper for free by clicking here.

If you don’t and you would like to read the paper, please get in touch with me on jamie.evans@bristol.ac.uk.