Could PPI Avert a Mental Health Disaster?

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A recent report revealing that house repossession is rated as the event most likely to cause mental health problems should come as no surprise, comments Payment Protection Insurance lobbyist Sara-Ann Burgess from Burgesses.

Sara-Ann Burgess, MD Burgesses

Calls have frequently been made for more to be done to bail out consumers financially and reduce the number of potential stress-related illnesses, but judging from the latest mortgage arrears and repossession figures this appears to be falling on deaf ears.

A recent report revealing that house repossession is rated as the event most likely to cause mental health problems should come as no surprise, comments Payment Protection Insurance lobbyist Sara-Ann Burgess from Burgesses.

The issue was raised in May by independent PPI provider British Insurance who warned lenders that their continuous seizure of properties from thousands of homeowners was contributing to escalating stress levels.

Mental health charity Rethink says that rising repossessions could damage the mental health of almost half the country following a survey that found 46% of 2000 respondents cited repossession as their main concern.

Rethink called for urgent action to prevent a mental health disaster as it believes a build-up of stress and worry of arrears can be enough to harm a person's mental well-being.

A view shared by Sara-Ann who says: "Calls have frequently been made for more to be done to bail out consumers financially and reduce the number of potential stress-related illnesses, but judging from the latest mortgage arrears and repossession figures this appears to be falling on deaf ears."

Statistics from the Council of Mortgage Lenders show that in the first half of this year there were 155,600 homeowners with mortgage arrears of three months or more and it's predicted this figure will rise to 170,000 by the end of 2008.

The Ministry of Justice reports that the number of court orders for repossessions rose to 28,568 for the three months to the end of June - the highest for 16 years - and the CML suggests this will increase to 45,000 by the year end.

Sara-Ann continues: "PPI providers with a conscience, such as British Insurance, have lobbied long and hard for lenders to recognise the emotional implications of the credit crunch. Repossessions are more than a financial sacrifice - people are losing their homes and livelihoods, relationships are suffering and families are being uprooted and taken away from their daily routines."

When British Insurance highlighted this issue a few months ago, the firm suggested that the 530,000 people* who yearly seek medical advice for work-related stress was the tip of the iceberg. It called for consumers to take out some form of payment protection cover to ensure they can meet their monthly financial commitments should accident, sickness or unemployment occur and alleviate the pressure.

Sara-Ann concludes: "A key contributor to payment failure and home repossession is redundancy and sickness, so to protect themselves consumers either have to cover their payments privately through insurance or risk no financial safety net at all."

She continued, "Those suffering from stress as a result of this credit crunch will undoubtedly increase and we all have a part to play in helping consumers cope during these difficult financial times. Providers must follow the lead of British Insurance and cover this condition and honour claims from people who develop mental health problems after taking out a policy. It could help avert a mental health disaster."

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