Barclays, Debt and Poor Handling of Mental Health Issues

[CAPM]

Hello

I have a close relative who has been sectioned 6 months ago under the mental health act. He is still in hospital and expects to be there for at least another few months. He has been diagnosed with Schizophrenia and suffers from severe psychotic episodes. It is a very very sad situation.

I just discovered he has a loan from Barclays of about £13k, he is over drawn and has no assets and very little income (benefits only). All his income goes to his family who struggle financially.

We have contacted the bank and explained the situation, they initially agreed to lower the payments to £50 a month.

In the meantime the doctors at the hospital have completed a Debt and Mental Health Form DMHF which explains in detail his condition, that the evidence suggests that he has been ill for a few years and that he remains too ill to be released from hospital nor capable of working.

We wrote a cover letter to go with the form asking if the bank would consider writing off the debt or freezing the debt. The bank responded last week saying that they have rejected our request on the basis that the condition was pre-existing at the time the loan was taken out.
The reduced loan payment agreement of £40 per month is also about to lapse and will revert to the £400 per month.

I don't know what to do???

I have researched and found the following information:

1. Larger and more reputable banks should have a trained staff and procedures who can deal with customers who have mental health issues and have become unable to service their debts. We have asked numerous people at Barclays but we can't seem to find a way of contacting a department who can handle this, we seem to only talk to a general consumer finance collections team. Does anyone know how to get to the right people at Barclays for this situation?

2. According to the Mental Capacity Act: banks cannot enforce contracts if the customer had insufficient mental capacity to make that decision at the time. I think this shows that pre-conditions certainly means that the bank should help in some way. They seem to say the opposite. Also my relative was not diagnosed until this year, although there is strong evidence that he has been unwell from before he took the loan out.

3. If all else fails and I cannot help him reach an agreement with the Bank then I might recommend he considers A Debt Relief Order (DRO) but unsure if he meets the criteria or if it is a good idea long term.

I don't know what to do now.

Can anyone please help advise me on how I can help my relative to get this sorted?

[Amethyst]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

Hi, I'm sorry you are having a difficult situation made worse by the Banks actions, I have asked someone to have a look that will be able to help more, but for the moment, does your relative have any assets ? and are there any other creditors?

[CAPM]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

Hello thank you v much for responding and having a look into this.
It is very hard to get insight into his whole situation but as far as I can tell he does not have any other creditors.
I know for certain he has no assets, no home, no car, just clothes, a very old laptop and an old mobile phone. That is it.
Thank you very much

[Amethyst]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

My instinct is to say there's really stuff all they could do...so don't be stressing over it,I think a DRO is one solution if the debt is still under £15k but hang fire for others who are more experienced in this area to see what they think. The site is going down overnight tonight so (fingers crossed) we'll be back up 9ish in the morning xx

[leclerc]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

It falls under the lending code section 9 paragraphs 241-252. If the bank are stating that his mental incapacity was already there at the point of sale or was deteriorating at the point of sale then is there a case of undue influence?


http://www.lendingstandardsboard.org...endingcode.pdf
The above is the lending code.

[Debt Camel]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

Hi CAPM,

This is a difficult situation and Barclays are certainly not being helpful. I would expect that they do have a special team that would be suitable for you to deal with than the general finance collecting team but a google doesn't come up with any useful pointers.

I find the assertion that they can't write of the debt because the mental condition existed at the time the debt was taken out bizarre. That isn't to say that your relative didn't have capacity to take out the loan - I think you will struggle to prove this. But as far as I am aware, a lender's duty to take the mental health of a client into account refers to their current mental health and its likely future progression, not to what has happened in the past.

I just discovered he has a loan from Barclays of about £13k, he is over drawn and has no assets and very little income (benefits only). All his income goes to his family who struggle financially.

Does he have other debts? How large is the overdraft? There is a strict limit of £15,000 for debts for a Debt Relief Order and you cannot leave a debt out in order to get under the limit (although it would be possible for you to choose to clear a small debt if that would take him under the limit - I'm not saying this is a good idea, just that it is a possibility) . From what you have said it sounds as though he is likely to pass the other DRO criteria - here is my summary of them: http://debtcamel.co.uk/debt-options/dro/

If he is currently safely under the 15k limit, then there is a lot to be said for going for a DRO now. If there is a delay and interest is added his debts may go over £15k.

The advantages of going for a DRO is basically that it is simple and final. You can stop wrestling with Barclays and any other creditors. A DRO will wreck his credit rating for six years, but in this sort of situation that is actually often a positive point as it will make it very difficult for him to borrow any more money.

Of course I don't know if he is in a fit state to take this decision at the moment. If he is, then I woudl recommend that he phones National Debtline to discuss his situation - they can set up DROs.

If you feel that he isn't up to dealing with this now, or if his debts are over 15k, then my suggestion would be that you write to Barclays, complaining about the way a vulnerable client (as evidenced by the DMHEF) is being handled - put COMPLAINT in capitals at the top of the letter! Ask them to consider writing off the debt. Say that if they cannot do this then he will be unable to pay more than a token £1 a month towards the debt. Supply an Income & Expenditure sheet with the letter showing that he cannot afford any more.

If his benefits are being paid into a Barclays account, then he needs to open a Basic Bank Account with a different bank and move the benefits payments to there. Or to his partner's account if he has a partner?

Barclays may huff and puff but there isn't much they can do in this circumstances. If they take him to court for a CCJ, then the judge is likely to set his monthly payment at a token amount and Barclays know this.

[leclerc]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

Furthermore the FCA Handbook states this: http://fshandbook.info/FS/html/FCA/CONC/2/10

I suspect that they are relying on this part of the handbook for their decision:

"A firm should assume a customer has mental capacity at the time the decision has to be made, unless the firm knows, or is told by a person it reasonably believes should know, or reasonably suspects, that the customer lacks capacity."

[CAPM]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

I would expect that they do have a special team that would be suitable for you to deal with than the general finance collecting team but a google doesn't come up with any useful pointers.

I couldn't find anything either and when I have asked the bank they seem to get confused and say that is the first time they have been asked that question.

Does he have other debts? How large is the overdraft?

Not as far as I can tell. He seems under £15k but I am worried as the interest hasn't been frozen at all and will be accumulating as you have mentioned.

If he is currently safely under the 15k limit, then there is a lot to be said for going for a DRO now. If there is a delay and interest is added his debts may go over £15k. He did mention a DRO to the bank when he first called them after being sectioned and they strongly discouraged him from pursuing this option in favor of the £50 a month payment while interest continues to accumulate.

it will make it very difficult for him to borrow any more money.

I agree this is a very positive point of a DRO and he needs this sort of restriction.

If his benefits are being paid into a Barclays account, then he needs to open a Basic Bank Account with a different bank and move the benefits payments to there.

He has no fixed address, he lives at the hospital, the landlord previously collected his mail but the landlord now decided to return mail to sender so we cannot use that address. His wife and kids moved abroad to relatives to save money. I also can't let him use my address for sensitive reasons. Is it possible to open a basic bank account if a person has no current address other than hospital?

Thank you so much this is very useful.

[CYNthesys]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

Hi,
First of all does your relative have the mental capacity to manage or administer his property and affairs?
Secondly has he made either an Enduring Power or a Lasting power of attorney?
If the answer to both the above questions is no, may I suggest that you write to Barclays advising that he lacks the necessary capacity to be able to deal with them.
If Barclays then wish to pursue the matter further ie by commencing court proceedings they would have to arrange for a litigation friend for your relative because a person lacking mental capacity cannot bring or defend proceedings.
Hope this helps, if you require further help or clarification please let me know as I have experienced a very very similar situation

[Kati]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

If someone does have POA over his affairs, I have found this: http://www.barclays.co.uk/PowerofAtt...P1242637373758 which gives links to other sites (and also info on getting/registering POA with Barclays Bank)

[CYNthesys]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

You mention a DRO, but does your relative have the mental capacity to enter into such an arrangement. A person lacking capacity has no capacity to contract.
Whilst ever your relative lacks capacity there is very little that Barclays can do. I realise that your family are all trying to help by liasing with Barclays, but do they have any legal authority to liaise in this way, and should Barclays be discussing your relatives business and making demands on 3rd parties?

[Debt Camel]

Re: Barclays, Debt and Poor Handling of Mental Health Issues

Is it possible to open a basic bank account if a person has no current address other than hospital?

That is going to be very difficult. If his only income comes from benefits, then one option is a Post Office Card Account http://www.postoffice.co.uk/post-office-card-account.

[dementia-old]

Taking house off 76yr old with Dementia, as Interest Only Mortgage has expired. Barclays have no heart

[Amethyst]

Can you tell us a bit more pls and I'll sort out a fresh thread for you xxx

Have they investigated other options with the house owner ?

What stage are things at - has repossession proceedings started ?

Does the house owner have support to help deal with things ?

[CYNthesys]

Under DDA/Equality Act the Bank is under a duty to ensure that disabled, including mentally disabled are not treated less favourably than persons who are not under a disability. It is my view that the Bank has a legal obligation to make reasonable adjustments in cases such as this. Has the 76 year old made an EPA/LPA authorising someone to administer their property and affairs.? Also are there any clauses in the mortgage contract to the effect that the Bank may only exercise their conferred powers subject to its compliance with any statutory requirements that are in force at the time.