Banks are enabling economic abuse. Here's how they could be stopping it
- Written by Becky Batagol, Associate Professor of Law, Monash Sustainable Development Institute, Monash University
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry delivers its final report today.
During its hearings there was an important problem that it has missed.
Banks and financial service providers are failing to adequately recognise the warning signs of economic abuse and family violence experienced by customers.
Family violence is a problem for the banks and their customers. It is a risk to them if it means loans can’t be repaid. It is a risk to their customers if they are made homeless and lose income and mental health in the financial fallout of abuse.
And it’s a problem for our community if banks and other institutions ignore or enable family violence.
Banks can spot warning signs
Customers, especially women, who seek loans from banks or who present to banks with high levels of financial stress might well be victims of economic abuse[1].
One recent Australian study[2] found that nearly 16% of women had a history of economic abuse and 7% of men.
Economic abuse is a subtle form of violence[3] that we often struggle to recognise.
Most of us know that slapping or pushing is violence[4]. But even victims can fail to see that it is also violence when their partner tries to deny them money[5].
Here are some of the ways in which it happens[6]:
• A victim of family violence can be forced to seek a loan that only benefits the perpetrator or to guarantee a loan made to the perpetrator
• A loan can be made to the victim and perpetrator jointly, but only the victim might make repayments
• After the violent relationship ends, the perpetrator might not contribute to repayments, and the bank might move to sell mortgaged property
• A victim might have difficulty obtaining information about a loan held in the perpetrator’s name which is secured by a mortgage over a family asset
They are not yet doing enough
In recent years there have been changes to banking industry guidelines[7] to encourage banks to prevent the financial abuse of victims of family violence.
The Australian Bankers’ Association[8] is pushing for widespread staff training. Much has been done, but a lot more needs to be done.
A 2017 survey[9] of 98 banks, building societies, credit unions and credit providers found an alarming lack of awareness of family violence amongst front line staff who rarely identify customers experiencing violence or are even aware of support services.
Most responding institutions said they did not have family violence training for staff or plans to introduce it.
One legal service provider recently assisted ‘Mi-Kim’.
Several months after Mi-Kim’s husband left her, a lender contacted her to advise that the loan to the home she lived in with her pre-school-aged children was in arrears. The loan was in her husband’s name but the lender could not contact him. Mi-Kim , whose English was poor, started paying money into husband’s account to make mortgage repayments. He was still able to access his account and made withdrawals. The lender moved to sell the property.
These victims are doubly disadvantaged by their exposure to violence as well as poor practices on the part of their credit providers.
We know that asking about the presence of family violence helps encourage victims to disclose it[10]. Where loans are being made to couples, financial service providers should specifically ask each member of the couple about family violence and whether any intervention/apprehended violence orders have been made.
Read more: The banking sector can do its bit to combat family violence[11]
Where violence is identified or suspected, a set of automatic protocols[12] should whirr into place.
For joint loans and guarantees in the name of family members who do not benefit, banks and other creditors should have a legal obligation to warn the person taking on the obligation of the importance of obtaining independent advice. The code of practice[13] should mandate information provision about family violence.
We have a rare opportunity to secure a common approach to family violence as part of the response to the banking royal commission. Our financial institutions should embrace it.
We are grateful to Women’s Legal Service Victoria and South East Community Links for providing the case studies referred to in this article.
References
- ^ might well be victims of economic abuse (theconversation.com)
- ^ recent Australian study (theconversation.com)
- ^ subtle form of violence (www.westjustice.org.au)
- ^ slapping or pushing is violence (ncas.anrows.org.au)
- ^ deny them money (ncas.anrows.org.au)
- ^ in which it happens (www.rcfv.com.au)
- ^ banking industry guidelines (www.ausbanking.org.au)
- ^ Australian Bankers’ Association (www.ausbanking.org.au)
- ^ A 2017 survey (www.fos.org.au)
- ^ encourage victims to disclose it (aifs.gov.au)
- ^ The banking sector can do its bit to combat family violence (theconversation.com)
- ^ automatic protocols (www.fos.org.au)
- ^ code of practice (www.ausbanking.org.au)
Authors: Becky Batagol, Associate Professor of Law, Monash Sustainable Development Institute, Monash University
