Debt and Financial Abuse – an unaddressed problem

Posted: 13th Nov 2015

by Nicola Crothers

13th November 2015

The term “domestic abuse” conjures many different images for people, and for most it is an immediate connection to physical violence. While physical violence is experienced by many victims, sexual, emotional and mental abuse are just as prevalent. Indeed many debtors from all walks of life fall victim to some form of abusive behaviour.

A form of abuse that many victims experience is one that has been overlooked historically; namely economic or financial abuse. Financial abuse can be defined as the control that one partner holds over the other economically. It can involve anything from insisting the victim hands over their employment earnings to removing access to the household finances, or even forcing the victim to take out credit in their name. This latter is known as coerced debt and is something many victims of domestic abuse experience at some time. One academic study of 103 domestic abuse victims reported that as many as 99% of respondents experienced some form of economic abuse.

Citizens Advice reported in 2015 that only 2 in 5 victims recognised this as a form of abuse, however, showing how little awareness still exists in this area. Coerced debt is becoming more prevalent as the level of consumer credit grows annually and more families are living with negative net worth. With huge advancements in automation within the credit industry, it has become incredibly easy to fraudulently apply for credit with a few personal details of a partner. Almost 75% of those who took part in the survey reported that they had been coerced into applying for credit by their abuser.

What is even more frightening is the lack of legislation and regulation in place to combat the issue of financial abuse and coerced debt. While section 75 of the Consumer Credit Act and The Payments Services Regulations 2009 offer some protection against fraudulent use of credit cards and unauthorised transactions, there is no specific legislation to deal with coerced debt and financial abuse. Last year, the government announced they plan to make coercive control illegal but this also needs to be supported with better education and awareness. The CEO of Citizens Advice, Gillian Guy, believes that “The FCA should look to provide guidance for banks and creditors dealing with financial abuse cases.”

One of the saddest aspects of financial abuse is that most victims don’t believe there is a way out and even if they manage to escape their abusive relationship, they struggle to start afresh because their credit rating is poor, and they are unable to secure accommodation or new credit. Many abusers control their victims in this manner, making them feel that they could not survive without them. Gillian Guy explains that abusers use the ties of joint debt and the lack of financial independence to make it “practically impossible” for victims to believe they can survive outside their abusive relationships.

As levels of household debt continue to grow and automated credit/loan applications become the norm, it can be difficult to prove coerced debt and financial abuse, and this is one of the other main reasons victims feel they are not able to leave the abusive relationship. With levels of awareness now growing and government beginning to address the issue of non-violent domestic abuse and coercive control, victims of domestic and financial abuse will hopefully begin to realise that they can escape their situation and start a life free from domestic abuse and financial control.

There are a lot of great support networks out there to help victims of domestic abuse and you can seek help or advice from the free and confidential helplines below.

  • For women, call the National Domestic Violence Freephone helpline on 0808 2000 247
  • For men, call the Men’s Advice line on 0808 801 0327

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