The Finance & Leasing Association (FLA) has announced it will provide financial backing for a review led by mental health experts will examine the effect debt has on individual’s personal wellbeing.

According to the group, the research will aim to improve the services provided to consumers struggling with their finances by monetary advice services, lending organisations and healthcare sectors. Existing scientific literature will be examined in an effort to ascertain to what level of impact areas of fiscal strain such as credit card debt, utilities expenditure and personal loans repayment have on consumers’ mental health.

Various factors will be considered, including the socio-economic impact as well as health and human costs incurred by those who are finding their finances impossible to manage. Furthermore, researchers will examine the capacity of loan providers and advisory services to assist those who are economically out of their depths. Local health authorities will also be evaluated as part of the process. The review will end with a report which aims to fill in the gaps in understanding concerning the cognitive effect problem debt has on consumers in today’s society.

Chris Fitch, research fellow at the Royal College of Psychiatrists (RCP), said he offered the project his full support, adding that the funding would allow for the first systematic study into the effect of financial overstretch on individual mental wellbeing. The review will be carried in joint cooperation between the RCP, the FLA and the Money Advice Trust and Mr Fitch announced that he was delighted be working with these groups as part of the RCP’s ongoing investigation into improving the healthcare conditions for those struggling with problematic debt.

For those who have found themselves struggling with repayments and unable to meet the inflated costs of living that have become evident in recent months, taking out a debt consolidation loan may prove an advisable course of action. In stretching payments out over a longer period of time, people may find monthly finances are easier to manage and less of a concern.

Stephen Sklaroff, Director General of the FLA, commented:”This review will make an important addition to our knowledge about debt and mental health. The FLA’s Lending Code already requires our members to deal sensitively with customers who have made them aware of any health conditions.”

Meanwhile, Joanna Elson, chief executive of the Money Advice Trust, said that previous research had shown that those with pre-existing mental health conditions were particularly vulnerable to debt.

“It is estimated that people with mental health problems are three times more likely than average to be in debt. This project will be immensely helpful in identifying and helping to ‘translate’ academic findings into a practical, user-friendly format and supporting those in the advice sector to understand the consumer behaviour of people with debt and mental health problems in relation to seeking advice.”

Last month, mental health chairy Mind warned that consumers need more support in meeting the demands on their finances. The group launched Mind Week in promotion of this campaign.

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