Debt & mental health : practical steps to help employees

UK household debt is on the increase; recent Bank of England figures show that consumer debt, excluding mortgages, now totals over £200bn and is approaching levels not seen since the financial crisis, making the UK the second most indebted economy amongst G8 nations. Money and mental health are often linked. Poor mental health can make managing money harder and worrying about money can make your mental health worse and it is inevitable that this has an impact in the workplace.

At our recent taster session at the Institute of Directors, MHAW invited Mark Hodson from Omnium Benefits to discuss his experience in helping people with debt problems.

An Associate Director at Omnium, Mark has offered pro bono debt counselling with the Citizens Advice and, in every single case he says, he wishes he could have spoken to the person in debt earlier. There are a lot of known causal links between mental health and financial health, and Mark wanted to give employers this advice:

“My experience is the number of employees, your employees, that have debt issues that is on the rise. Many don’t know where to start; they know there’s a problem but they don’t know what to do. They over-rely on the internet, which is fantastic if you know what you want; if you don’t, it’s a dangerous place when it comes to debt management.”

Mark qualified this by saying that debt is being normalised, with people believing debt is a fact of life and a very personal issue at the same time. By searching the word ‘debt advice’ on Google for example, the top hits are debt consolidation companies; not necessarily helpful if you’re in debt crisis.

Mark also explained that next year many pension statements, bank statements and other financial paperwork will become paperless, allowing debt to creep up if you don’t keep track of it, or if like many other people “you file paperwork in a drawer, with numbers that you don’t understand and go back to it in your 50’s, to try and make sense of it.”

Mark advised there are three essential steps when faced with debt management. Most importantly as an employer, he said, to give your workforce time off to help them manage their finances by:

  • Early intervention: talk to someone if you notice changes, a conversation works across all generations for engagement, as with mental health issues.
  • Prioritisation: Red/Amber/Green – what needs to be dealt with immediately, to contact credit card companies and explain the issues and put in place a plan.
  • Incident Consequence Escalation Crisis – an incident could trigger a consequence in spending that could escalate and get out of hand. Look out for prolonged absences, pestering by debt companies, threats of further action

Mark’s three areas to avoid if at all possible are:

  • Consolidation loans, including Payday loans, which can have an APR of 50%
  • Individual Voluntary Arrangements, that are binding legal agreements and
  • Individual Bankruptcy – a ‘complete nightmare’ that will affect credit ratings for years and is a matter of public record, and could make financial life very difficult.

“Decide what you can and can’t do for your staff as an employer, but give them time – in my experience, the best organisations are the Citizens Advice service or Christians against Poverty. If you can spot the triggers early, have that conversation, point people in the right direction, you will be doing them a massive favour for both their financial and mental wellbeing.”



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