Inquiry into the Financial Services Regulatory Framework in Relation to Financial Abuse

Recovering from financial abuse can be a complex and traumatising process which requires specialist support. Financial counsellors, lawyers, and social workers at Women’s Legal Service Victoria report that financial abuse is experienced by most of our clients in some form, and its impacts are devastating and far-reaching and extend far beyond the time a victim-survivor leaves a violent relationship.

While there has been some progress, there is still insufficient understanding about family violence, financial abuse, and its dynamics within many Australian banks and financial institutions. It is critical that the financial sector continues to build capability to respond to financial abuse and resolve the inconsistencies across the industry.

In our experience there is considerable additional risk of financial abuse as financial institutions’ move towards online provision of services and products, and particularly as perpetrators use coercive control to commit financial abuse online behind closed doors. These risks are exacerbated for migrant women and those facing language barriers.

There are significant opportunities to strengthen the effectiveness of legislative and regulatory frameworks that govern financial institutions’ responses to the prevalence of financial abuse. In addition to the submissions by Women’s Legal Service Australia (WLSA), Economic Abuse Reference Group (EARG) and Financial Counselling Victoria (FCVIC) that we’ve endorsed, we suggest a number of ways to improve regulation, including: expanding consumer protections and other regulated schemes across a range of organisations and institutions that provide credit; and increasing Australian Financial Complaints Authority (AFCA) awards for compensation for non-financial loss where financial institutions breach their obligations.