Landmark report of financial abuse in Australia provides 61 recommendations to tackle $10.9b problem

Banks should make more thorough checks on new loans, all holders of joint insurance policies should be notified of changes and the tax office should take control of child support payments under sweeping changes proposed to protect domestic violence victims being financially abused.

A landmark examination of financial abuse and how Australia’s systems respond has made 61 recommendations where the cross-party committee unanimously wants the sector and the Government to act.

The committee said it was “astounded” at the scale of financial abuse and deeply concerned that products continued to be manipulated by perpetrators.

It has been estimated to directly cost victims $5.7 billion a year plus a further broader economic toll of $5.2 billion. This includes almost $2 billion in unpaid child support.

“Financial abuse is not just heartbreaking, it is dangerous,” committee chair Deborah O’Neill said.

“Government and financial institutions need to treat it like what it is – an immediate threat to life and safety.”

Financial abuse is a common form of domestic and family violence and can include controlling someone’s access to money or ability to work, racking up debt in their name, damaging someone’s property such as rental homes or cars, refusing to pay child support or mortgage payments, or deliberately delaying settlements after a relationship breakdown.

The problem is pervasive across the whole sector: banks, insurance, buy now pay later, superannuation, car loans, mortgages and child support.

An estimated 1.6 million women (one in six) and 745,000 men (one in 13) have experienced economic abuse by a partner.

Labor MP Zaneta Mascarenhas, who pushed for the inquiry, said the committee had uncovered issues it did not anticipate.

“We’ve seen how systems and financial products are weaponised to inflict harm – harm that prevents victim-survivors from recovering and moving forward,” she said.

“Superannuation, credit and debit products, mortgage arrangements: all of these can be turned into tools of abuse. This must stop, and we all have a role to play.”

The committee has recommended banks redesign joint accounts to make sure people have individual access, make it easier for victims to take out loans when fleeing a relationship, but also ensure there are stronger checks for online applications to prevent loans being taken out in people’s names.

It found privacy laws were a significant barrier to institutions giving appropriate support to victims and should be changed to allow anonymous reporting of abuse including where the victim did not explicitly consent.

As well, better interaction between law enforcement, courts and financial institutions should lead to referrals of cases of economic abuse and compulsory follow-up by the companies, preferably in-person.

The committee also recommended ground-breaking changes to the child support system for payments to be overseen by the Australian Tax Office, with the power to give recipients a tax credit for any amounts unpaid and raise a tax debt against the person who did not pay it.

Social entrepreneur Catherine Fitzpatrick, who has worked to get banks to tackle financial abuse, said the sector could act on some of the recommendations immediately without waiting for government action.

But legislative action was also vital.

“This report provides a unique opportunity to set a global standard in tackling financial abuse. We can’t afford to delay it, because every day of inaction perpetuates harm,” she told The West.

“The finance sector can continue to lead the way, but regulators … (and) policymakers also need to close the gap quickly.”