Blog: What is financial abuse and how can the debt collection sector challenge it?
A qualified solicitor, Sara de Tute has over 10 years’ experience as a Legal & Compliance Director within the debt collection sector. She is a member and former president of the Credit Services Association’s Board of Directors.
Last month, I attended an event hosted by Citizens Advice to launch their recently published ‘Addressing Financial Abuse’ report. The report provides banks, other creditors and advice providers with a framework for helping to stand up to financial control by intimate partners.
What is financial abuse?
Unlike physical abuse, financial abuse is not well understood or easily identifiable. Financial abuse is typically one person controlling the finances of another in an extreme way. Examples given at the launch event included someone’s partner not allowing them access to their own bank account, taking out credit and running up debts in a partner’s name, stopping a partner from getting or keeping a job, stealing from a partner or refusing to contribute to household costs and forcing a partner to ask for money or commit fraud in order to obtain money. We were told of a woman who was given a shopping list each week by her partner with the exact amount of money to the penny she had to purchase food. She was violently attacked by her partner when she had to use her children’s birthday money to do the shopping because her purse had been stolen and she dare not tell him.
The majority of victims of financial abuse are women but men can also be victims. It can affect anyone from any background or walk of life.
What are the consequences of financial abuse?
The report highlights the fact that people who are prevented from managing their own finances from an abuser can suffer serious long term consequences, even after the relationship has ended. Aside from the potential financial hardship caused, financial abuse is also often part of wider domestic abuse, including violence and psychological bullying. For example, the woman mentioned above was also made to sleep on one side only and if she turned over she was woken up and made to sleep on the floor.
What is the role of the debt collection sector in challenging financial abuse?
No doubt a number of the customers that we as debt collection professionals deal with on a daily basis will be victims of financial abuse. In fact, it is likely that being contacted by a debt collection agency may make the problem worse for those who are trying to hide financial difficulty from their partners. Along with lenders, creditors and advisers, we are therefore responsible for helping to identify and address the problem. Although we have means of assessing a customers’ vulnerability, financial abuse will not always be clearly identifiable, particularly amongst customers who do not want to disclose what is happening to them. However, more people are disclosing financial abuse and discussing it with advice providers and there are steps we can take to escalate this.
The Citizens Advice report calls on financial services firms and charities to work together to improve how we respond to problems faced by customers. By encouraging and validating disclosure of financial abuse, we can break down the major barrier of fear of not being believed, and by providing carefully planned reassurance and proactive help when it is safe, we can play a part in challenging it at the point at which victims are likely to be at their most vulnerable. The report also includes recommendations on protecting confidentiality and referring people to the right source of help according to their circumstances, which provide useful insight for collections professionals.
The publication of this report is a positive step forward in bringing financial abuse into public consciousness and ensuring that victims are treated sensitively and given the right help.