Lenders Should Carry a Health as Well as Wealth Warning, Says British Insurance

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Lenders seizing properties from thousands of homeowners are contributing to escalating stress levels across the UK, warns Simon Burgess from independent PPI provider, British Insurance.

Simon Burgess, MD British Insurance

It's all very well lenders urging consumers to speak to them if they're facing difficulty meeting mortgage repayments, but they're unlikely to be interested in any knock-on effects their inappropriate lending may cause.

Lenders seizing properties from thousands of homeowners are contributing to escalating stress levels across the UK, warns Simon Burgess from independent PPI provider, British Insurance.

The Health & Safety Executive defines stress as 'an adverse reaction other people have to excessive pressure or other types of demand placed upon them'. With the Council of Mortgage Lenders predicting 45,000 or 123 repossessions a day this year, Burgess believes more must be done to bail out consumers financially and reduce potential stress-related illnesses.

He comments: "Over 530,000 people* yearly seek medical advice for what they believe to be work-related stress, so I wonder how many on top of this are suffering from mortgage-related stress. Given there are 11.8m people with mortgages in the UK, I'm worried this figure could be huge.

"Everyone's talking about the financial toll of the credit crunch, but what about the emotional implications? Studies show that excessive or prolonged pressure can cause mental and physical problems, and if adults are stressed and anxious, it's likely to impact on children as well."

He continues: "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.    This issue cannot be ignored - lenders' irresponsible actions over the years have made them culpable. Particularly vulnerable are those who borrowed beyond their means with 100% + mortgages and the 1.4m coming to the end of fixed rate agreements."

Government measures to support consumers facing repossession include free legal advice, specialist training for debt advice agencies and the offer of Income Support for Mortgage Interest.

However, Burgess considers this is too little too late: "Mortgage interest is only payable to people who have been unemployed for nine months and will only pay on mortgages up to £100,000. The average mortgage is around £160,000 so I fail to see how this will help. There's a shortage of support across the board - lenders are happy to receive a 'bail out' from the Government when they're suffering, but are unable to offer anything substantive to customers when they need it most.

"A key contributor to payment failure is redundancy, so to protect themselves consumers either have to cover their payments privately through payment protection insurance or risk no financial safety net at all."

Burgess concludes: "It's all very well lenders urging consumers to speak to them if they're facing difficulty meeting mortgage repayments, but they're unlikely to be interested in any knock-on effects their inappropriate lending may cause."

  • According to the International Stress Management Association

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