Research and advocacy of progressive and pragmatic policy ideas.

Editorial Public Goods

We Need An Integrated Approach to Manage Financial Distress and Mental Health

Financial distress and mental health are related – so why are the ways we structure assistance to those affected still in silos?

By Editorial Team24 August 2020

Baca Versi BM

Back in April this year, a month after the first Movement Control Order came into force, The Centre initiated a study to understand how the lockdown was affecting the mental well-being of ordinary Malaysians. Among the key findings, we saw (unsurprisingly) that those who reported decreased incomes were more likely to report feelings of depression, anxiety and stress than those who experienced no change or improvements in income.

Although Malaysia’s official unemployment rate is starting to show signs of improvement, the sense of financial stability on the ground is still fragile. With the end of the blanket loans moratorium coming up this 30th September, it is not a major stretch to say that the risk of household financial distress and the accompanying mental health effects will be high.

Research linking financial distress with mental health issues is well established, particularly from countries badly hit by the 2008 financial crisis. Given existing research as well as what we know of current economic conditions, how can we manage a potential impending crisis more proactively?

To deal with the intertwined issue of financial well-being and mental health, we propose a much more integrated approach in public outreach involving financial institutions and mental health services.

Downward Spiral

But first, a broader look.

The relationship between mental health and financial distress is mutually reinforcing. For instance, someone with high levels of debt could be susceptible to negative emotions like depression or anxiety which may, in turn, impair their ability to manage their debt effectively. The debt problem would then continue to mount, putting them at risk to even more severe negative emotions and the cycle goes on.

Worse yet, financial distress could further compound the illness of someone with existing mental health conditions, which often goes undiagnosed particularly amongst lower income groups. Research by the Mental Health Foundation UK shows that even during non-pandemic times, there is an increased risk of mental health issues the lower one’s socioeconomic standing. The jobs and debt fallout from a pandemic could well cause a clinical mental health crisis among financially vulnerable groups.

Mental health and financial issues do not exist in silos. An appropriate response must also recognise how the two are intertwined and build linkages between relevant channels and stakeholders.

Breaking Down the Silos

Currently, someone facing mental health issues may seek help from mental health helplines or professionals. Similarly, an individual undergoing financial distress may deal with their bank or other loan providers to resolve the issue; some may be referred to agencies such as AKPK for debt counselling. Many troubled individuals may not even be aware that the two issues could be linked and may only seek assistance for one problem, if at all.

We need measures that, firstly, increases public awareness of the relationship between financial distress and mental health. Apart from the benefit of increasing public awareness, it would also help to destigmatise the two problems and make it seem more acceptable for people to seek help.

Secondly, we need a system or network that allows for cross-referrals between relevant parts and actors in financial services with those in mental health services. Of course, loan officers should not be psychologists, or vice versa! The key point is to give timely guidance or helpful information at these common public touchpoints, where someone facing financial issues could be given the option of signing up for mental health assistance and vice versa.

The Social Synergy Programme (SSP), launched by Perkeso in 2018, is an example of how an integrated response can be structured. The program brings together a number of different parties – mostly government agencies – that work together under a ‘no-wrong-door’ approach. The programme allows for cross-referrals between parties to resolve various issues faced by the client (while still adhering to PDPA requirements). 

Longer Term: Shared Guidelines

While financial counselors are not mental health experts and vice versa, nonetheless there is space for knowledge-sharing and the development of shared guidelines so that frontliners in both sectors are more equipped to deal with the linkages and issues.

Such guidelines already exist in a number of countries, especially in Europe as a result of the fallout from the 2008 financial crisis. The Money Advice Liaison Group in the UK has best practice guidelines for organisations and frontliners when dealing with consumers experiencing both mental health and debt difficulties. Mental Health First Aid Australia meanwhile provides separate guidelines for financial institution staff, accountants, financial counsellors and mental health professionals when dealing with individuals with mental health and financial issues.

In Malaysia, the MyHealth portal provides broad guidance on the link between debt and mental disturbance but there is space for much more to be developed.


The Director-General of the World Health Organization has called for significant investment into mental health as part of the response to the pandemic. This unprecedented moment should also give us the impetus to rethink how we approach issues interlinked with mental health. An integrative approach and mindset will be needed to manage these challenges, or there will be many more who fall through the silo-driven gaps.

Note: As part of our CSR efforts, we are supporting pilot projects that put in place more integrated approaches towards managing financial distress and mental health. If you would like to be a project partner, please contact us at

The Centre is a centrist think tank driven by research and advocacy of progressive and pragmatic policy ideas. We are a not-for-profit and a mostly remote working organisation.