OFT publishes mental capacity guidance

[Legal Beagles]

The OFT has published guidance for businesses when they are considering granting credit to people who might not have the mental capacity to make informed borrowing decisions.

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[leclerc]

Re: OFT publishes mental capacity guidance

http://www.oft.gov.uk/shared_oft/con...ns/oft1373.pdf

The above is the specific guidance but it is a bit of a wishy washy stance

[The Debt Star]

Re: OFT publishes mental capacity guidance

Yes, well its based on the Mental Capacity Act 2005.

The Act itself states that a person lacks capacity in relation to a matter if, on a balance of probabilities the individual has an impairment of, or a disturbance in, the functioning of the mind or brain and the effect of this is that the individual is unable to make the specific decision at the time the decision needs to be made.

A person is unable to make a decision in relation to a given matter if, with appropriate assistance as necessary, the person is unable to understand the information relevant to the decision, to retain that information, to use or weigh that information as part of the process of making the decision or to communicate his decision by whatever means.

That's the definition and the new guidelines incorporate it.

Medical evidence in support of a claim of mental incapacity is always going to be critical.

[leclerc]

Re: OFT publishes mental capacity guidance

The medical evidence bit has to be recorded on bank records and this may well be the issue with regards to preventing lending since it's a rarity that banks have checked this in the past. I would hope that there would be new internal guidelines within banks to do this now.

[Jabba]

Re: OFT publishes mental capacity guidance

A difficult one for lenders. Even if they had a tick box "Are you now or have you ever been insane?" question, such a borrower would hardly tick "yes" would they? And, even if they did, it wouldn't protect the bank because the lender would have had impaired understanding at that point anyway.

Probably explains the wishy washy greyness to which you refer.

The point though about the medical evidence is, so I understand, intended to refer to a situation where a debt is challenged on the basis that at the time it was taken out by the borrower he or she was mentally impaired. A route to unforeceability.

[tortoise]

Re: OFT publishes mental capacity guidance

Mr Leclerc sir, I so agree. New rules would indeed be apt. Very complex issue and one of these that appears so awfully sensible to begin with. After some reflection however, one realises the difficulties of implementing such guidance.

[Caspar]

Re: OFT publishes mental capacity guidance

This could be a nightmare.