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 an opinion 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 an opinion.

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.