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Financial Rights E-flyer: November 2021

Confronting economic abuse on

White Ribbon Day 2021

Special edition

People who face domestic violence often find themselves in financial chaos.

Perpetrators not only abuse their partners physically and emotionally, but also exert control over them economically. They control their partner’s income and exploit them financially including by coercing them to take on debt.

The difficulty in obtaining financial independence is often a significant barrier to a victim survivor leaving a violent relationship. And a lack of financial independence can result in a person returning to that relationship.

The Financial Rights Legal Centre has a long history assisting women affected by relationship debt. In the past year more than 20% of our representation services have been for women experiencing or impacted by family violence.

Due in large part to our promotion and prioritisation of services for women experiencing violence, the percentage of callers to our services experiencing family violence increased by more than 60% in the past two years.

Last year, we gave advice and referrals to 235 women who were impacted by family violence. Unfortunately, due to limited resources, we were only able to provide complex casework services for 32 of them.

The victim survivors who reach out or are referred to Financial Rights are overwhelmed by multiple debts and credit listings, or other intractable problems that present complex legal challenges to professional caseworkers.

Victim survivors may also be suffering from the debilitating effects of the abuse, severely inhibiting their capacity for self-advocacy.

With specialist help from financial counsellors and lawyers, there is a pathway to a safer and more financially secure life.

Financial Rights is working hard to drive change to provide better industry support and laws for people who have faced or are facing domestic violence.

This includes the publication of our recent desktop audit of insurance family violence policies and our work in credit reporting. In this eflyer issue, we also look at elder financial abuse in Aboriginal and Torres Strait Islander communities and we tell a few stories from women we have been able to help overcome the devastating effects of economic abuse.

Contents

  1. Insurance Family Violence policies: Desktop Audit
  2. Credit Reporting and economic abuse
  3. How we have helped: Economic abuse case studies
  4. Mob Strong Debt Help: Look out for the signs of “humbugging” Aboriginal Elders

Insurance Family Violence policies: Desktop Audit

The 2020 General Insurance Code of Practice introduced a requirement for insurers to have family violence policies available online for their customers from 1 July 2020. For many insurers this will be the first publicly available written policy indicating how they will support customers experiencing family violence. Financial Rights saw this as an important opportunity to inquire into which insurers’ written policies demonstrated best practice, and to benchmark all General Insurance Code subscribers in order to encourage ongoing improvements of their family violence policies.

The desktop audit examined whether subscribers family violence policies met the 11 areas required to be addressed by the Insurance Council of Australia’s Guide to helping customers affected by family violence. Policies were judged as to whether they met the requirement, partly met the requirement or did not meet the requirement at all.

The audit provides insight and guidance for the industry on best practice and encourages insurers to make ongoing improvements to their family violence policies.

Findings: AssetInsure scored “11 out of 11”

The desktop audit found that only one insurer scored full points of 47 insurance companies.

AssetInsure has the strongest family violence policy in the general insurance industry. The policy was found to have definitive language and specific measures that detail how they will help those subject to family violence

Tokio Marine achieved 10 out 11 and Youi achieved 9.5 out of 11 while Aioi Nissay Dowa, Great Lakes and MunichRe all achieved 9 out of 11.

Disappointingly a little over half the subscribers scored 5.5 out of 11 or less. Ten insurers scored less than 3 out of 11, and four insurers scored 2 out of 11.

Improving outcomes

Financial Rights Chief Executive Officer Karen Cox said it was great to see AssetInsure and other insurers making solid commitments to assist people who were affected by family violence.

“Family violence is a scourge and insurance can unfortunately be intentionally or unintentionally used by perpetrators to harm victims,” Ms Cox said.

“Perpetrators for example can take control of home or car insurances depriving their partner of insurance altogether, or preventing them from making a claim or receiving a payment.

“Perpetrators can also damage homes leaving innocent victims unable to claim due to exclusions under the policy. Survivors of family violence can also be treated poorly by insurance claims handling processes.”

A culture of supporting vulnerable consumers

It’s critical these policies are backed up by a strong culture of supporting vulnerable consumers and putting the appropriate systems in place to not just talk the talk, but to walk the walk.

It’s hoped this important research highlights to all general insurers where they can improve and can learn from each other’s policies to better serve family violence victims.

We are keen to ensure that providing strong protections for victims of family violence is not an area of competitive tension between insurers and that this research can be the rising tide that helps lift all the ships of the industry to higher standards.

Credit Reporting and economic abuse

Coming soon: A credit reporting and domestic violence guide for caseworkers and advocates

Financial Rights and the Economic Abuse Reference Group are working to develop a credit reporting and domestic violence guide for domestic family violence (DFV) caseworkers and advocates.

The guide will set out the steps advocates need to take to help clients resolve DFV-related credit reporting problems, whether those problems are ongoing or several years old.

The new guide will aim to encourage industry to take a more consistent approach towards DFV-related credit reporting solutions. We hope industry will create its own mirrored guide for lenders, just as Financial Rights and the EARG are undertaking for advocates.

We encourage DFV caseworkers or financial counsellors that have credit reporting questions they would like answered in the guide to reach out to Financial Rights or the EARG quickly. We want the guide to be as useful for caseworkers as possible.

Advocating for victim survivors of domestic violence

There are many different circumstances advocates and case workers face when assisting victim survivors of domestic violence. These might include:

  • A victim survivor has left relationship but doesn’t know what debts are in their name;
  • A victim survivor fled an abusive relationship years ago, but is being rejected for credit because of negative information on their credit report that came about as a result of domestic violence;
  • A debt waiver has been offered by a creditor because of domestic violence circumstances, but the creditor won’t agree not to report a default;
  • A victim survivor wants a default, or other negative information, removed from their credit report because it was the result of a coerced debt, the debt was taken out in their name without consent, or the debt occurred because they were unable to make payments because of the ongoing violence;
  • From 1 July 2022, there may be an impact on victim survivors from the new requirement to report financial hardship information and repayment history information on a joint borrower’s credit report.

Ambiguity over what the law currently cover

Financial Rights believes that negative information should not be on a credit report if a debt was incurred as a result of domestic violence, or if the negative information was caused as a result of domestic violence. However, legal arguments for removing negative information from credit reports can be complex.

That is why Financial Rights is currently advocating for changes to the Credit Reporting Code in the Privacy Act to improve outcomes for victim survivors. We consider that specific obligations should be included to guide credit reporting bodies and credit providers when dealing with victim survivors of economic abuse.

Many of the tools that currently exist to help victim survivors clear negative information from their personal credit reports are informal and uncodified.

Advocates mostly rely on ad-hoc compassionate action by lenders and there are no clear guidelines. Some lenders require certain evidence of domestic violence while others don’t. Some proactively offer credit reporting solutions if they see red flags of abuse. Others wait for a victim survivor to disclose the abuse before offering solutions.

Financial Rights and the EARG are seeking clarification with industry as to which assistance for victim survivors is clearly allowed by the law.

Economic abuse case studies: How Financial Rights has helped

A survivor of financial abuse, Lily was on the verge of homelessness

Lilly, a single mother of two, is a survivor victim of domestic and family violence. Her former partner Michael controlled all the household finances while the family home and home and contents insurance were in his name.

Lily remained in the family home with the children when the couple separated. Shortly after, a fire rendered the house unliveable. Michael claimed on the home insurance policy but refused to make a claim for a temporary accommodation for Lily and the children.

Lily contacted the insurer’s agent to plead for assistance but was told that temporary accommodation would not be provided because Lily was not the insured on the policy.

When Lily sought Financial Rights’ assistance, she was staying in crisis accommodation and was on the verge of homelessness.

Financial Rights acted immediately. We made an urgent claim with the insurer that as a third party beneficiary under the policy, a tenant and an equitable owner in the marital home and a victim of financial abuse, Lily was entitled to temporary accommodation under the General Insurance Code of Practice. Further the insurer was committed under its Family Domestic Violence Policy to recognise vulnerable customers, be flexible and explore best options. 

The insurer still declined. Lily had one more night of crisis accommodation left when Financial Rights lodged an urgent dispute to the Australian Financial Complaints Authority, and escalated the matter to the attention of the relevant ombudsman. This led to Lily being provided two weeks accommodation in two bedroom flat while longer term accommodation could be found. Lily and the kids continued to benefit from temporary accommodation under insurance policy while the house claim was dealt with.

Louise moves on with a safer, financially secure life

Louise was in a financially abusive relationship for many years. In a final act of vengeance, her ex-partner started a fire in a property while Louise was inside. Thankfully Louise was not physically harmed. But the property was damaged and Louise was traumatised.

She had owned the house for a number of years before the marriage. In the early days of the relationship she agreed to add her ex-partner’s name to the property and to use it as security for a several loans to help him with his business. The loans increased as the relationship became more dangerous. Her partner was arrested after the fire, imprisoned and then deported.

Louise was left with an insurer which refused the claim for the fire damage, as he was a joint policy holder, and an unaffordable joint mortgage.

When Louise was referred to Financial Rights by a domestic violence worker, she had obtained Family Court orders removing her ex-partner from the title. The insurer also agreed to pay for most of the repairs on an ex-gratia basis. But there was an outstanding dispute about quality of the repairs.

With respect to the mortgage, Louise had gone to the Australian Financial Complaints Authority, which reduced her liability under the loans and stopped the interest. Louise still owed a debt. She couldn’t afford interest-free repayments, as she had always been reliant on a disability support pension.

Financial Rights assisted Louise to raise the matter with the Customer Advocate of the bank and renegotiated the outcome. The mortgage was discharged in full and the bank agreed to expedite the family court order to change the title into Louise’ sole name.

Yasmeen released from credit card debts

Yasmeen had been in a financially, emotionally and physically abusive relationship. When she first arrived in Australia she was not working and spoke little English. After the birth of her second child, she was violently assaulted by her husband and before he left.

She showed her social worker her bank account and asked why the balance kept reducing by almost $300 a month. It became apparent that Yasmeen had been unknowingly paying a department store credit card for years. The social worker referred Yasmeen to Financial Rights for help.

The credit card application contained a number of red flags which should have alerted a lender to question the suitability of the loan under the law. Financial Rights assisted Yasmeen complain to the Australian Financial Complaints Authority. In conciliation, the lender agreed to release Yasmeen from the contract and refund all payments she had made.

Mob Strong Debt Help:  Look out for the signs of “humbugging” Aboriginal Elders

Mob Strong Debt Help is raising awareness about “humbugging” as part of collaborative community push to address the financial abuse of Elders in Aboriginal communities.

Practitioners are encouraged to be on the lookout for signs of “humbugging” which describes circumstances when a person demands money or other items of value from another person, which they have no intention of repaying.

Victims of humbugging are often unaware there is free, confidential legal advice and financial counselling available to help them solve debt problems and gain more independence and control over their money.

A cultural practice: Sharing resources

Sharing resources is a common cultural practice among Aboriginal people.

Traditions of giving and respect mean Aboriginal Elders often feel obliged and responsible to provide for their family.

This can lead to Elders neglecting their own wellbeing to provide money and other non-financial resources such as food or appliances to loved ones who may be struggling financially.

Most instances of humbugging involve smaller sums of money rather than large amounts with Elders repeatedly harassed or pressured into providing for others. Elders who receive a large lump sum compensation payment from past abuse are often targets for humbugging as well.

Sadly, humbugging can be seen by Aboriginal people as “normal” behaviour which makes it difficult to challenge or change practices.

A recent report by Kimberley Birds as part of the Kimberley Community Legal Services Aboriginal Financial Elder Abuse Project found humbugging is getting worse, especially by young people such as the grandchildren and great grandchildren of Elders.

What is humbugging

Humbugging can take different forms. The misuse of Elders’ Centrelink benefits is a common problem with circumstances often driven by unemployment and poverty.

Relatives, such as the children of Elders, might access an Elder’s pension allowance and use the funds to help support their family and children.

Some people also claim a carer’s payment for an Elder but do not provide any care.

In the worst circumstances, there is outright theft with relatives using an Elder’s bank card without their permission, stealing personal information to take out unauthorised loans and misusing powers of attorney or guardianship.

Financial abuse is a form of domestic violence

It must be remembered that financial abuse of Elders is a form of domestic or family violence and abuse.

Elders may be subjected to threats, intimidation and even physical abuse if they refuse to provide money or other resources to others. In other circumstances Elders may feel harassed or manipulated or coerced into helping relatives.

Distrust of police and other government authorities can mean Elders might feel nervous, anxious or distrustful about seeking help.

Elders may struggle to understand how to use modern technology such as banking apps or ATMs and a lack of financial literacy and knowledge about their rights can also be barriers to seeking help.

Advocating for a review of Centrepay

Mob Strong is among many organisations calling for a review of Centrepay to help prevent relatives, as well as companies and businesses, from taking advantage of Elders.

The prevalence of Centrepay in remote communities opens up additional opportunities for abuse.

Centrepay payments are often processed without the authorisation of an Elder or in circumstances where the Elder has been coerced into the debt.

Elders can also become entangled in debt spirals because they have purchased items or services they cannot afford using debt arrangements with Centrepay.

Education may lead to greater protection and prevention

Mob Strong hopes that by educating people about humbugging and how to protect and manage their finances better might help to prevent instances of the financial abuse of Elders.

It is critical that practitioners have a cultural understanding and knowledge to help address financial abuse and support Elders to access appropriate support services.

Engage with the Elders

Elders experience humbugging but also have to maintain their role of looking after their family. It is vitally important to work with Elders on identifying what is abuse and what strategies could there be to prevent humbugging in a sensitive manner.