Opinion: the law should force banks to combat financial abuse

Money plays a major role in domestic abuse, trapping people in coercive relationships. We need to take stronger measures to stamp out abuse

Financial abuse is a serious issue affecting many people in the UK.

It traps them in coercive relationships, limits their freedoms and ability to escape, and enables abusive partners to exert even greater control over every aspect of their daily lives.

As a journalist, I have spoken to many people whose lives have been blighted by financial abuse and, in each case, it was coupled with physical and emotional abuse as well.

Some managed to escape, only to find their ex had taken out loans and credit agreements in their name, leaving them trapped in debt long after they made their getaway.

Others lived with financial abuse on a daily basis and could only speak in hurried, ashamed phone conversations on condition of anonymity and then begged me never to contact them again in case their partner found out.

Recently, I interviewed a woman whose ex had used smart technology to exert control even when she was at home without him or at work.

Financial abuse rarely exists on its own; it is symptomatic of dangerous levels of control and coercion within a relationship. It can be devastating to hear the impact it has on families, on children and on those who manage to escape.

So I was delighted when the UK financial services industry acted on this issue this month.

UK Finance, which represents almost 300 of the leading firms providing finance, banking and payments services, launched a new voluntary code of conduct.

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The Financial Abuse Code of Practice

UK Finance developed this code together with recommendations from charities, support groups and the Financial Services Vulnerability Taskforce, setting out six key principles for financial services businesses to meet.

These include raising awareness of the issue among employees; training staff in the appropriate responses to someone disclosing financial abuse; and reducing the need for people to be forced to repeat their disclosure to other people within the company.

It also includes helping affected people to regain control of their finances; and knowing when and how to refer customers to other relevant organisations, such as lawyers.

These principles do not just benefit people experiencing financial abuse from their partners, they will also help those experiencing financial abuse from family members or carers.

And that’s particularly important for the older population and is likely to become a growing issue as the number of people living longer lives and needing more support increases.

Eric Leenders, managing director of personal finance at UK Finance, said: “financial abuse does not discriminate – it can happen to anyone and whether you or a person you know is a victim of financial abuse, taking those first steps to seek help is very brave.

“The financial services industry can play a key role in helping combat financial abuse, offering support to victims to help them regain control of their money.

This new voluntary code provides further guidance for banks and building societies and, once rolled-out, will help raise awareness amongst staff so that victims of financial abuse can be confident that they will be treated sympathetically and positively in these particularly difficult circumstances.”

Andrew Bester, CEO of the Co-operative Bank, said: “This new code of practice represents an important step forward and is a result of the finance industry working together to do our best to support vulnerable customers who have been the victim of financial abuse.”

So far, so good. Raising awareness of this issue, particularly among the banks and building societies that provide personal banking services is essential.

However, I think the scale of the problem requires something more than a voluntary code of practice.

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Tip of the iceberg

Research carried out with The Co-operative Bank and the domestic violence charity Refuge has shown that 18% of all adults in the UK have been a victim of financial abuse in a current or past relationship.

That's almost one in five.

Furthermore, 30% of those surveyed said they know someone who has experienced financial abuse in a relationship.

It’s also important to remember that this is not an issue affecting one specific group; victims span gender, age and income groups. 60% of all cases reported are women, but that means a significant number of both men and women are affected by this pernicious form of control.

And, as my own experiences interviewing victims shows, financial abuse rarely occurs in isolation. 82% of those affected have been victims of other forms of abuse within their relationship.

This is a breathtakingly wide issue that almost certainly affects several people you know.

Sandra Horley, chief executive of Refuge, said: “Over the last 12 months alone, Refuge staff have worked with over 1,500 survivors of economic abuse. 

“Women we supported described how abusers had complete control over household finances, forcing them to take out overdrafts and loans in their names which they then spent, or preventing them from working and earning money.

“The consequences of economic abuse are devastating. Over a fifth of Refuge service users said that as a result, they were unable to buy food for themselves and their children, and over a third were unable to buy non-food essentials, 27% had problems with debt and over 10% had been made homeless.

 “Whilst there is much more to be done to prevent economic abuse and support survivors, the UK Finance code of practice is a huge step forward in recognising both the immense scale of economic abuse in the UK and the vital role the banking sector can play in protecting victims.”

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More must be done

I agree with Horley in that I am delighted by this important step but worry that more must be done. This is such a widespread and devastating issue for the people affected that upholding these principles needs to be enshrined in law for financial services providers.

With growing numbers of fintech firms offering easy ways to micro-manage finances, disruptive start-up digital wallets and bank account providers, and smart home tech firms offering money-saving devices that monitor movements and activity in the home – this protection has to become law.

Otherwise, the big financial providers will take steps to counteract the issue and provide greater support, but the new entrants to the market will allow abusers to continue – and potentially facilitate even greater control through technology designed to help save cash and rein in spending.

I admire UK Finance and its members for recognising the important steps they can take to help those people trying to flee coercive control and domestic violence.

Particularly the Co-operative Bank, which has been carrying out research and campaigning on this issue alongside Refuge.

But a voluntary code is insufficient when the stakes are so painfully high.

What do you think? Should more be done? Should providers be forced by law to adopt this kind of code? Have your say using the comments below.