Identifying mental capacity issues

The firm's starting point should be that all customers have the capacity to enter into a finance agreement unless or until there are indicators that suggest otherwise. 

Firms are not expected to undertake clinical assessments of customers' mental capacity – they can only be expected to form a suspicion that a customer may have some form of mental capacity limitation where they have information or evidence (possibly from observing specific behaviour by the customer) which triggers such a suspicion.

There is no exhaustive list of indicators that may lead a firm to suspect that a customer might have some form of mental capacity limitation.  However, here are some examples:

  • a relative, close friend, carer or clinician raises concerns with the firm;
  • the customer clearly does not understand what they are applying for;
  • they are clearly unable to understand the information and explanations provided;
  • they appear confused about the personal or financial information being sought by the firm;
  • they appear willing to enter an agreement they clearly cannot afford;
  • they are unable to communicate their decision;
  • they have no awareness of their own financial circumstances; and/or
  • the information they have provided is inconsistent with other information provided.


Amongst the most common potential causes of mental capacity limitations are:

  • a mental health condition;
  • dementia;
  • a learning disability;
  • a developmental disorder;
  • a neurological disability or brain injury;
  • alcohol or drug (including prescribed drugs) induced intoxication.