Opinion
A scourge on our society: We need to talk about financial abuse
Victoria Devine
Money columnistFor all the empowering and uplifting financial stories I’ve heard over the years, there is one line I heard years ago that’s never left me: If you want to stop someone from leaving you, leave them with no money.
Though still chronically under-recognised and misunderstood by many, make no mistake, financial abuse is very real, and it is a scourge on our society.
Economic abuse can take many forms and, like all forms of abuse, impacts people from all socio-economic backgrounds and across many different relationships. Now, thanks to the federal inquiry into financial abuse, we have been exposed to just how commonplace, destructive, and profoundly traumatic it can be.
A survey by the ABS reveals 16 per cent of women and 7.8 per cent of men are currently or have previously experienced financial abuse.Credit: Steven Siewert
Though it can look different for every person, financial abuse most commonly presents as restricting a person’s access to money, monitoring spending, someone being asked to take out a loan in their name on behalf of their partner, a person being signed on to loans or credit cards without their knowledge, and using payment references in money transfers to send abusive or threatening messages to an ex-partner.
It can also look like elderly people being pressured to designate a power of attorney or being coerced into parting with money due to inheritance impatience, or parents managing children’s money without clear oversight.
As Caroline Wall, Head of Customer Vulnerability at Commonwealth Bank, recently explained on a recent episode of She’s on the Money, “Financial abuse is not accidental. One person makes a choice to use money to control another person.”
Of course, there’s nothing inherently wrong with one person managing the money in a relationship. You don’t have to manage the finances if you don’t want to, but you do need to have access to your accounts, know where your money is, and how much is there.
It’s when a person fails to consult the other, when a person has no say in what is happening financially, or when someone is using money as a way to gain power and control that it risks becoming abusive.
If you’re wondering how big a problem this is, strap in. As part of its annual personal safety survey in 2023, the Australian Bureau of Statistics introduced new questions asking about economic abuse for the first time, in addition to previous questions on verbal harassment, emotional abuse, childhood abuse, and physical and sexual assault. The results reveal 16 per cent of women and 7.8 per cent of men are currently or have previously experienced financial abuse.
But as Wall points out, when you consider that around 90 per cent of people who seek support for other forms of family and domestic violence also say they’ve been affected by financial abuse, the real number is likely to be far higher.
And even if you’re not directly experiencing it, our failure to act is costing us all. According to the federal inquiry, financial abuse currently costs Australian victims $5.7 billion a year and the economy a further $5.2 billion. It’s also clear the problem is still growing, with one senior banking figure saying that this time last year, the NAB received around 60 calls a month relating to financial violence, but that number has more than tripled in just one year, with the number of calls now sitting at around 200 a month.
Chaired by Senator Deborah O’Neill and Zaneta Mascarenhas MP, the inquiry has uncovered countless stories that are enough to make your blood boil and your heart sink, and shed light on the difficulties in tackling this kind of abuse.
One woman, Shenane Hogg, told the inquiry of a $56,000 debt her ex-partner amassed against her name and without her consent. Confronting him led to physical violence, with Hogg spending nine months in a coma. To this day, she is still on a rental blacklist.
A senior representative from Westpac recalled an elderly customer appointing her son power of attorney, only to see him transfer $150,000 from his mother’s account into his own within weeks.
Thankfully, the bank was able to return the money after the woman, but here’s the kicker – they were only able to do so because the son banked with the same institution as his mother. Had he moved his mother’s money into an account with a different institution, it could have been gone forever.
That’s because under current privacy legislation, banks cannot contact another institution to track down funds, just one of the many frustrations the banks have flagged during the inquiry. Another issue is our current legislation, or lack thereof. Though financial abuse is recognised as a criminal act at a commonwealth level, it’s only recognised as a crime at a state and territory level in NSW and Tasmania.
As NAB executive leader Jocelyn Turner said, “If a customer calls us and says, ‘I’m in danger. He’s about to hurt me, something is about to happen,’ then we would refer that to the police immediately.” When asked what if the caller were to say they were about to be hurt financially, Turner admitted, “That is a different challenge because we don’t have anywhere to refer it to.”
Expecting victims, who often quite literally do not have the means to flee, to figure this out won’t cut it. Though banks certainly need to do more to protect customers, there is no doubt that more needs to be done by all levels of government to ensure every last loophole is closed.
Support is available via 1800 Respect and Shepherd House.
Victoria Devine is an award-winning retired financial adviser, best-selling author and host of Australia’s No.1 finance podcast, She’s on the Money. Victoria is also the founder and director of Zella Money.
- Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.
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