6 banking changes needed to help victims of financial abuse

More changes are needed to help victims of financial abuse regain their independence, trade body UK Finance is warning.

Many banks and financial firms are signed up to a voluntary code of practice and have a range of measures in place, such as flee funds and safe spaces available in branches. However, UK Finance said more can still be done in three key areas.

Here, Which? takes a look at the recommendations put forward by UK Finance and explain what features banks currently have in place to support victims.

What is financial abuse?

Financial abuse covers a broad spectrum – it could be a carer taking an extra £10 from their client's purse, or a husband controlling their wife's everyday spending. Abusers can be romantic partners, family members, friends or carers. 

It could also be that someone is building up debts in your name, forcing you to pay for their goods, accessing your financial accounts without your permission, or manipulating you into signing over property.

Financial abuse is often part of wider economic abuse; it can mean controlling other resources such as housing, transport, employment and clothing. 

In 2021, the Domestic Abuse Act was updated to legally recognise economic abuse as a form of domestic abuse. 

According to the charity Surviving Economic Abuse (SEA), in the past 12 months, more than five million women have experienced economic abuse. Of these, 2.5 million had restricted access to their bank accounts, while 2.1 million had credit taken out in their name, or had their credit rating deliberately destroyed.

Find out more:

Financial abuse: three key areas

Nicola Sharp-Jeffs, founder of SEO, said financial ties like mortgages or child maintenance payments sent with abusive messages ‘create an invisible chain to the abuser', which can prevent victims from moving on. 

Here are the main issues identified: 

Debt

Research from SEA found 60% of financial abuse victims have been coerced into debt, with average debts of £27,000 split across five creditors. 

The report said UK Finance members such as banks are committed to supporting these victims and voluntarily writing off debts on a case-by-case basis. But according to SEA, just one in four of these debt write-off requests is successful.

Find out more: 

Separation of joint financial products

The report found that separating joint financial products sounds simple, but can be very complex depending on the products involved, the legal status of the relationship and the level of co-operation from each party. 

For example, discharging the liability of a mortgage usually requires it to be repaid. But this might only be possible by selling the property and paying back what is owed to the lender. However, one party may want to remain at the property, or might be unable to move. 

Find out more:

Abusive payment references 

When banking details are known, or payments are required to be made from the perpetrator, such as for child maintenance, victim-survivors have reported that the payments systems can be misused to contain abusive words and messages in the payment reference field. 

Last year, challenger bank Starling launched a ‘hide references’ feature that can mute unwelcome abusive references that could accompany bank transfers.

What recommendations have been put forward?

UK Finance has come up with several recommendations that the government, the charity sector and financial institutions can take action on. 

Here are six key banking recommendations in more detail:  

Development of an option to block payment references, so customers can decide whether to see this information from a payer. 

Development of a Tell Us Once service, whereby victims could disclose abuse to multiple organisations without having to repeat themselves.

A commitment across financial services to accept the Economic Abuse Evidence Form, an information-sharing tool to allow qualified money or debt advisors to tell an organisation that someone has experienced economic abuse.

A review of how coerced debt is reflected on the victim's credit file.

The Consumer Credit Act should be revised to include guidance on how to split joint unsecured debt where there is no consumer agreement or court order.

Mortgage lenders should review their lending to allow a temporary and agreed adjustment when a victim-survivor is looking to become the sole borrower on a joint mortgage.

How your bank can help now

Several banks have a range of measures to support victims. 

Several banks also offer ways for victims to communicate with them discreetly. Lloyds Banking Group has implemented ‘quick exit buttons’ on their websites so that victims can exit financial abuse-related web pages quickly without leaving any browsing history. The Co-operative Bank has an online economic abuse disclosure form, so victims can inform it of the abuse when it is safe to communicate.

Meanwhile, Lloyds, HSBC and Barclays offer non-geographical sort codes, to prevent a perpetrator from knowing the victim's whereabouts. 

Find out more: 

Where to get support

undefined

source https://www.which.co.uk/news/article/banking-changes-needed-to-help-victims-of-financial-abuse-atXaZ7w0BBb2