“Weapons”: $12,000 deducted from account

Banks have been urged to stop “weaponizing” everything from joint accounts, credit cards and mortgages to prevent financial abuse or coercive control of women, a new report warns.

“He maxed out the credit cards and the bank came after me to pay off his debt. I almost lost mine

house and my spirit. My already high stress and anxiety escalated. The impact on me and my children has been inexcusable,” revealed one woman in the report.

“I would go shopping with our two young children or fill up the car and the credit card would be declined,” said another.

“It was only when this happened that I found out that he had either canceled the card or lowered the credit limit to an amount well below the previous one. It was embarrassing and made things extremely difficult as I couldn’t buy what was needed at the time.”

Former bank director Catherine Fitzpatrick wrote the report Engineered to Disruptand said it’s time banks sent a clear signal to abusers that abusive behavior is unacceptable.

“Few other companies are better placed to protect women from financial abuse and its devastating health and economic impact on them and their children,” she said.

The report calls on all 97 Australian banks, serving 19.5 million customers, to make simple changes to their products – starting with changing the terms and conditions to make it clear that a bank account is not a place for abuse.

“Financial Abuse is Widespread”

Rebecca Glenn, CEO of the Center for Women’s Economic Safety, which commissioned the report, said banks need to make it harder for abusers to use financial abuse as a coercive control tactic.

“Currently, banking products are designed so that all relationships are healthy and equal. But the reality is that financial abuse is rampant in Australia – and banks can do more to protect victims and survivors,” she said.

“Banking products can and should be redesigned to protect couples opening joint accounts from the start.”

Banking products commonly used to “weapon” financial abuse are common products such as transaction accounts, credit cards, personal loans and mortgages, the report says.

It called for new measures such as setting up each joint account with separate passwords, logins and portals for each person so that it is easier and safer to break up if the relationship ends or is abusive.

For credit cards, the report recommended banks ensure each cardholder is accountable for spending on their card by applying a chargeback method to disputed transactions and banning joint or secondary cardholders.

For mortgages, it has been suggested that clients should be informed about mortgage liability and options in the event of separation, and choose the contract type with a 50:50 liability or other percentage.

Women told harrowing stories of financial abuse in the report.

“We had around $12,000 to cancel our home loan on the house we lived in. When I left, he stopped paying the mortgage, so the payments were deducted from the repayment funds,” said one woman.

“When we did our property settlement, the entire redraw was gone. He was earning a full-time salary without having to make rent/mortgage payments.”

Another woman spoke about breaking up with her partner, but he refused to pay his share of the mortgage, interest and insurance, even though he was down $72,000 and she was unemployed after she was fired.

She said he “didn’t care” about the bank and refused to go after her partner for his share of the repayments. Your partner wouldn’t agree to just switching to interest payments either.

“He kept telling me that the bank would repossess the house and I would be homeless,” she said.

“I didn’t know about it as they hadn’t sent me anything, so I kept having to call the bank to check. After many months I finally got the bank to agree to interest only payments.”

500,000 abusive transactions

But the report unveiled new data showing banks had taken some steps to protect victims, including 90 percent of customers who were blocked from sending fraudulent payment descriptions after a warning letter from their bank

Since 2020, more than 500,000 abusive transactions have been intercepted in real time and 3,000 customers have been warned, blocked from online banking or left the bank.

Ms Glenn said women are more than twice as likely to experience financial abuse as men

and they do so within existing structural economic inequality.

“Financial coercion can prevent women from leaving their abusive partner, it deprives them

financial autonomy and can ruin their creditworthiness and leave them in debt,” she said, adding that the system can be “very unhelpful and difficult” for victims.

The report found that an estimated 90 percent of those supporting domestic and

Domestic violence is affected by economic abuse, but is still unrecognized by many of those affected.

Mothers who separate from abusive partners also experience a 34 percent drop in income, with delayed property settlements, enforced liability for joint debts, bankruptcy and insolvency, debt arrears and challenges in repairing credit ratings compounding financial difficulties.

$5.7 billion problem

The direct cost to Australian victims and survivors of financial abuse has been estimated at US$5.7 billion per year, with a cost to the economy of US$5.2 billion per year in lost productivity, additional healthcare costs Income and additional expenses are estimated.

Financial Counseling Australia CEO Fiona Guthrie added that financial advisors saw it

every day a devastating number of financial abuse among their clients and recognized the role

Banks can help prevent this abuse.

“It’s important that banks put safeguards in place to protect people from economic abuse and the crippling effects on their health and well-being and that of their children,” she said.

While the report highlighted the practical steps banks have taken to reduce financial abuse, there was still much more work to be done than can be done and “embedding safety by design would be game-changing,” she added.

The report’s findings are currently being debated by regulators and consumer groups, while Ms Fitzpatrick said she plans to raise them specifically with the Australian Securities and Investments Commission.