Financial abuse – time for financial planners and advisers to help save lives and not just change them! 

It’s taken centuries but finally an understanding of economic harm and financial abuse has made its way into the mainstream. However, there is still a great deal of work to do!

In the UK we are extremely fortunate to have the charity Surviving Economic Abuse1 which is leading the way and working tirelessly to make a change and put a stop to this horrifying form of abuse.

One of the most significant changes came in April 2021 when the Domestic Abuse Bill2 (now enacted into UK law as the Domestic Abuse Act 2021) was expanded to strengthen legislation around controlling or coercive behaviour (CCB) – no longer making it a requirement for abusers and victims to live together.

The change follows a government review which highlighted that those who leave abusive ex-partners can often be subjected to sustained or increased controlling or coercive behaviour post-separation.

Personally, ever since becoming aware of the shocking impacts of economic and financial abuse, we (the team at Standards International) have also been championing the cause to raise awareness within financial services, specifically within the professional roles of financial planners and financial advisers.

While the statistics vary slightly across the world, it is estimated that around 1 in 4 women (1 in 5 in the UK) and 1 in 7 men experience financial abuse.

Quite frankly these figures are mind-blowingly high!

What is even more shocking is that, according to research in the US by the National Network to End Domestic Violence (NNEDV), financial abuse occurs in a staggering 99% of domestic violence cases. And don’t think it’s limited to a certain ‘type’: it can occur irrespective of socio-economic category, education, race or ethnicity.

Oh, and it doesn’t stop there – not only is domestic abuse part of their suffering, there’s also the related emotional and sexual abuse, intimidation and, of course, the scourge of financial abuse.

Abusers often use financial manipulation to gain power and control. This can include anything from concealing the family’s financial situation and limiting access to assets, to reducing access to finance and even determining whether or not someone is able to work, and in what position.

Those who are fortunate enough not to have been directly or indirectly impacted by domestic violence often scratch their heads and ask, ‘Why do they stay?’ The answer is simple – according to Women’s Aid, more than half of women experiencing domestic abuse said they had no money so could not leave. This leaves them well and truly stuck!

A sufferer’s main concern is usually their ability to provide financially for themselves and their children. This is cited as the top reason for both staying in and returning to abusive relationships.

What does financial abuse look like?

• Hiding assets.
• Forcing the victim to work in a family business with little or no pay.
• Refusing to pay bills and ruining credit scores, but running up bills in a partner’s name.
• Forcing the victim to turn over social security funds, or threatening to turn the victim in to the authorities for ‘cheating the system’.
• Control over how all family finances are spent.
• Not including the victim in investment or financial decisions.
• Not allowing access to bank accounts.
• Forbidding the victim from attending job training or advancing in their career.
• Sabotaging work or employment opportunities through stalking, harassment or physical abuse.
• Withholding funds or providing a limited ‘allowance’.
• ‘Period poverty’, through which women are made to stay at home during menstruation because they have no access to sanitary products.
• Refusing to pay or evading child support.

So, why should financial planners and advisers care?

Because, if those statistics are true and it really is as high as 1 in 4 women and 1 in 7 men who suffer at the hands of their abuser… I only really need to ask one question: How many clients do you have?

Add to this, in most countries, there is a regulatory requirement to know your client: the simple reason is that it’s hard to give comprehensive and appropriate advice if we don’t.

Financial planners and advisers are perfectly placed to raise any sort of question about money without it seeming ‘odd’!

Plus, having a client’s best interests at heart moves you to want to assist those in a difficult financial predicament in the best way you know how.

But without the knowledge and the skills in your kit bag – even if you were to suspect foul play within the lives of any of your clients – you may find yourself at a loss as to what to actually do to help!

An original strategy would be to assist your existing clients before they enter new relationships, encouraging them to consider how they will protect their assets once they are part of a couple.

You may also be able to help reduce the risk of exposure to financial abuse through education, and through advising clients about protection options such as trusts or binding financial agreements.

One survivor, who interestingly worked within financial services, was duped by her husband for A$1.2 million prior to his attempted murder of her, and wished that her own financial adviser had raised his concerns with her when he clearly should have spotted some unusual activity.

When asked what advice she had for others in a similar situation, she suggested that they seek help immediately: talking to a trusted family friend or reaching out to a professional is a must!

She also had this advice for professional advisers:

If the person being abused is happy to speak with you, just listen. Ask if they’d like help and support.

Sometimes, for their own reasons, they may be willing to stay in the relationship and are simply glad that someone is aware of what’s happening to them, so that they can be on hand to support and help if needed.

However, with a heightened awareness, chances are you may come across cases sooner rather than later, so it is always best to ‘be prepared’.

So, what is the role of a financial planner or adviser in these cases?

Unfortunately, there is no cookie-cutter approach and each case is unique, but there is support and training available to you if you feel this is something you should be ready to handle should the situation present itself.

As a global ambassador for financial abuse prevention and remediation, we are thrilled to have partnered with Amanda Cassar, who is a practising financial planner on the Gold Coast of Australia, in the design and launch of a unique Financial Abuse SpecialistTM training and certification programme.

The programme was launched in June 2020 with global interest and has been designed to equip financial planning professionals and their teams with knowledge and understanding of ‘What next?’ Once their understanding is demonstrated, they will be awarded with the Financial Abuse SpecialistTM certification mark, which will help consumers and their clients to identify the right level of expertise and the support available to them.

To find out more about the programme please visit:

https://standardsinternational.co.uk/certification/financial-abuse-specialist/ 

1. https://survivingeconomicabuse.org 

2. https://www.gov.uk/government/news/new-laws-to-protect-victims-added-to-domestic-abuse-bill