The Parliamentary Joint Committee on Corporations and Financial Services report Financial abuse: an insidious form of domestic violence is claimed to mark "a crucial turning point in addressing financial abuse", characterised as "a tragically underacknowledged form of intimate partner and family violence that has often gone unseen or ignored":
It has devastating effects on those it impacts. Financial abuse undermines the economic independence of the victim, often trapping them in cycles of financial hardship and dependency that can span decades, extending well beyond separation or divorce. This form of abuse is far more frequently perpetrated by men against women. It affects individuals at every stage of life. Women, especially those in vulnerable communities, are disproportionately affected by financial abuse, with women from culturally and linguistically diverse backgrounds, Indigenous communities, and women with disabilities facing even greater risks than the general population. This report exposes the shocking extent of financial abuse in Australia.
The financial toll on victims of financial abuse is estimated at $5.7 billion (around $3 billion more than the amount lost to scams in Australia in 2023. The abuse is often absent from mainstream discussions of domestic violence,.
The report calls for comprehensive reforms across multiple sectors to address financial abuse, with 61 recommendations aimed at both preventing and mitigating the impact of financial abuse. The report contains five chapters. Chapter 1 includes information on the conduct of the inquiry, acknowledgements and background on the prevalence of financial abuse in Australia, how financial abuse sits with domestic and family violence and previous inquiries and reports. Chapter 2 examines current legislation, common law and regulatory arrangements that govern the ability of financial institutions to prevent and respond to financial abuse. It also considers t the role of advocacy bodies in responding to financial abuse. Chapter 3 examines how financial providers identify, respond to and prevent financial abuse. Chapter 4 examines proposed areas for reform to better support victim-survivors of financial abuse. Chapter 5 examines the role of government, and how government services can be manipulated by perpetrators to financially abuse victim-survivors.
The Committee's recommendations are
Recommendation 1 That the Australian Government establish a mechanism for co-design with victim-survivors of financial abuse (including through representative groups) in relation to the implementation of legislative, regulatory and sector-driven reforms aimed at mitigating the prevalence and impact of financial abuse, including the recommendations of this report.
Recommendation 2 That the Australian Government amend the National Consumer Credit Protection Act 2009 and ASIC’s Regulatory Guide 209 to specifically require: that the lender must take reasonable steps to be satisfied that a borrower and any guarantor is not experiencing financial abuse; and that the lender must take reasonable steps to verify the lending requirements and objectives of each borrower and any guarantor.
Recommendation 3 That the Australian Government establish a review of Responsible Lending Obligations and the National Credit Code, informed by the lived experience of victim-survivors, to consider options for: protecting victim-survivors of family and domestic violence to obtain credit; and the inclusion of specific conditions to support victim-survivors of family and domestic violence to stay in their own homes.
Recommendation 4 That the Australian Government amend the National Credit Code to require financial institutions to inform all borrowers of changes to joint credit contracts in circumstances of reasonably suspected family and domestic violence, including financial abuse.
Recommendation 5 That the Australian Government consider how to best allow financial institutions to document and/or flag actual or suspected financial abuse against their customers when detected or reasonably suspected, including without explicit consent from customers. This may include amendments to the Privacy Act 1988.
Recommendation 6 That the Australian Government amend the Credit Reporting Code to specify that financial abuse is considered ‘circumstances beyond the individual’s control’; and that ARCA develop a best-practice financial abuse guideline for credit reporting bodies and credit providers.
Recommendation 7 That the Australian Government undertake appropriate action, including legislation, to clarify that circumstances of family violence, elder abuse and homelessness constitute a serious threat to the life, health and safety of an individual. This may include amendments to the Privacy Act 1988.
Recommendation 8 That the Australian Government amend the Insurance Contracts Act 1984 to allow insurers to deem a joint insurance policy to be a composite policy in situations involving separation or divorce of co-insurers, and in situations where a victim-survivor’s claim would ordinarily be denied due to the conduct of their perpetrator of financial abuse or coercive control.
Recommendation 9 Recognising the legitimate choice of Australians to have self-managed superannuation funds, the committee recommends that the Australian Government undertake a review of the intersection between financial abuse and the superannuation system, particularly in relation to self-managed superannuation funds; and ensure that the review is informed by the lived experience of victim-survivors.
Recommendation 10 That the Superannuation Industry (Supervision) Act 1993 be amended to provide a mechanism so that a beneficiary who has perpetrated domestic or family abuse, including financial abuse, and domestic violence related suicide, against the superannuation account holder can be declared an invalid beneficiary of the account holder’s superannuation death benefits.
Recommendation 11 That the Australian Government undertake a review of all financial products and services and government services to ensure that a perpetrator cannot financially benefit from the death of victim-survivors, including in circumstances of domestic violence related suicide.
Recommendation 12 That the Australian Government continue to monitor the effectiveness of the Family Law Act 1975 in recognising financial abuse.
Recommendation 13 That state and territory law societies undertake a review of the ethical obligations of legal practitioners in relation to receipt of instructions which may have a financial abuse motive and available penalties for members who actively enable or facilitate financial abuse on behalf of their clients where there is no other reasonable basis underlying the instruction given by the client.
Recommendation 14 That the Australian Government implement measures to achieve greater consistency in state and territory EPOA laws applying best practice to prevent financial abuse; and to promote education and awareness programs aimed at reducing elder abuse occurring through misuse of EPOAs.
Recommendation 15 That the Australian Government implement a mandatory requirement for providers of financial services and products, as well as government agencies to include a ’quick exit’ button on webpages (in accordance with current best practice) to assist victim-survivors of family and domestic violence and financial abuse.
Recommendation 16 That financial institutions introduce minimum operating standards, with a view to achieving best practice standards through continuous improvement over time, for including increased friction points in relation to online application processes and electronic transactions to better protect against financial abuse on online platforms.
Recommendation 17 That the Australian Banking Association, the Australian Federal Police, victim-survivor advocate organisations and relevant government departments and other stakeholders co-design standard operating guidelines for the referral of reasonably suspected or reported financial abuse to the financial institutions used by suspected perpetrators and victim-survivors. Triggers for referral should include credible reports made to anonymous law enforcement hotlines, informal and formal reports made to law enforcement, and court proceedings such as the attainment of AVO’s. The Australian xiii Government should consider any legislative amendments required to give effect to such standard operating guidelines.
Recommendation 18 That financial institutions be required to maintain anonymous reporting mechanisms through which victim-survivors of domestic and family violence, or other individuals, can report actual or suspected financial abuse of the institutions’ customers.
Recommendation 19 That financial institutions ensure that a referral or report of suspected family and domestic violence involving one of their customers triggers immediate engagement with that customer, preferably through in-person attendance at a physical branch or office, to determine the suitability of their current and future financial products.
Recommendation 20 That financial institutions immediately review the accessibility of their in- person banking services and, where necessary, take steps to ensure that customers have reasonable access to in-person banking services or banking support services.
Recommendation 21 That the Australian Government, in conjunction with the Australian Financial Complaints Authority, consider potential remedies for customers suffering financial abuse who have suffered loss after a financial institution has failed to provide reasonably appropriate access to in-person banking services or other support services in circumstances where the financial institution was aware (or should have been aware) that the customer was at high risk of financial abuse.
Recommendation 22 That financial institutions, government and relevant stakeholders all increase financial literacy education and in-person support to assist older Australians to use electronic banking services and reduce the risk of financial elder abuse.
Recommendation 23 That the Australian Banking Association develop and implement minimum operating standards, with a view to moving to best practice standards through continuous improvement over time, applying to all authorised deposit-taking institutions in relation to identifying and responding to abusive descriptions in electronic money transfers. xiv
Recommendation 24 That the Australian Government consider introducing appropriate penalties for the use abusive descriptions in electronic money transfers to harass, intimidate or harm the holder of the account.
Recommendation 25 That, prior to approving joint banking or credit products, financial institutions implement reasonable and practical continuous disclosure requirements relating to family and domestic violence to assist with the identification of financial abuse.
Recommendation 26 That the Australian Government legislate to require financial institutions to ensure the following requirements for establishing a joint account: that each joint account holder has their own access to the account; that each joint account holder is aware of and has consented to what information will be visible and/or shared with the other account holder; and that each joint account holder understands the mechanisms available to ensure the safety of the account, such as ’two to sign’, before withdrawals can be made.
Recommendation 27 That financial institutions implement the recommendations of ASIC’s report titled Hardship, hard to get help: Findings and actions to support customers in financial hardship relating to identifying and providing additional support to vulnerable consumers experiencing financial hardship.
Recommendation 28 That ASIC conduct a review within 24 months on the implementation and operation of the recommendations of its report titled Hardship, hard to get help: Findings and actions to support customers in financial hardship relating to identifying and providing additional support to vulnerable consumers experiencing financial hardship.
Recommendation 29 That the Australian Government implement a legislative requirement for financial institutions to report periodically on the number of customers identified as experiencing financial abuse, similar to the current requirements for financial hardship.
Recommendation 30 That the Australian Government undertake a review of the amendments to the National Consumer Credit Protection Act 2009 in the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, to commence within 24 months of the amendments coming into effect, to consider their effectiveness in supporting victim-survivors of financial abuse, and specifically the inclusion of Buy Now Pay Later products under Responsible Lending Obligations.
Recommendation 31 That the Banking Code of Practice, Customer Owned Banking Code of Practice and the Buy Now Pay Later Code of Practice be amended to: include specific reference to financial abuse under ’vulnerable customers’; and require banks to develop systems to proactively identify (to the extent reasonably practical) and offer support to customers who may be experiencing financial abuse.
Recommendation 32 That the general insurance industry implement minimum operating and customer-service standards, with a view to moving to best practice standards through continuous improvement over time, relating to identifying and responding to financial hardship being experienced by victim-survivors of financial abuse.
Recommendation 33 That the Australian Government amend the Insurance Contracts Act 1984 to require a ’conduct of others’ clause in all retail insurance policies.
Recommendation 34 That Part 9 of the General Insurance Code of Practice and the Life Insurance Code of Practice be amended to define family violence and financial abuse and to better promote the financial safety of victim-survivors of family and domestic violence.
Recommendation 35 That the Australian Government undertake a review of the COVID-19 early release of super scheme, with a focus on the number of members who may have withdrawn superannuation savings under coercion and the retirement and other impacts on victim-survivors who accessed their superannuation as a result of financial abuse; and consider an appropriate scheme for the xvi repayment of superannuation by individuals whose withdrawals were the direct result of financial abuse, to enable them to restore their superannuation balances.
Recommendation 36 That the Australian Government consider the implementation of minimum operating standards, with a view to moving to best practice standards through continuous improvement over time, to mitigate the risk of elder abuse in relation to superannuation.
Recommendation 37 That accounting bodies, financial advice and planning peak bodies, and victim-survivor advocate organisations co-design education resources for service providers to enable increased identification of financial abuse and timely reporting of suspected abuse to financial institutions and law enforcement bodies.
Recommendation 38 That accounting, financial planning and financial advice industry bodies develop and review ethical obligations of their profession in relation to receipt of instructions which may have a financial abuse motive and institute accompanying penalties for members who actively enable or facilitate financial abuse on behalf of their clients where there is no other reasonable basis underlying the instructions given by the client.
Recommendation 39 That the finance sector develops a financial Safety by Design framework and assessment tools. The committee further recommends that the framework is developed in consultation with the financial services industry, victim- survivors, family and domestic violence academics, community service providers and regulatory design experts.
Recommendation 40 That financial institutions that provide mortgages implement the standard practice of offering multiple offset accounts for joint mortgages.
Recommendation 41 That the Australian Government expand the Design and Distribution Obligations to include consideration of customers impacted by family and domestic violence, including financial abuse, and the potential for perpetrators to cause harm by misusing products and services.
Recommendation 42 That financial service and product providers ensure that financial abuse is explicitly referenced in the terms and conditions for all financial products.
Recommendation 43 That financial institutions implement minimum operating standards, with a view to moving to best practice standards through continuous improvement over time, for the introduction of positive friction points to minimise the risk that a customer is applying for a product under coercion or duress or without providing free and informed consent.
Recommendation 44 That financial institutions ensure that, in addition to general training about family and domestic violence, all employees have training in financial abuse that is appropriate to their level and role.
Recommendation 45 That financial institutions, government and relevant stakeholders all provide appropriate support to culturally and linguistically diverse consumers through: culturally appropriate financial literacy programs and plain language product descriptions or ways of talking about financial abuse to promote financial awareness and help-seeking; and where a language barrier is identified, the provision of interpreters and employees trained in providing interpreting services in the family violence context.
Recommendation 46 That the Australian Government support Aboriginal Community Controlled Organisations to develop training and education programs for financial providers to increase understanding of financial and economic abuse of Aboriginal and Torres Strait Islander Australians.
Recommendation 47 That the Department of Defence and financial institutions co-design best practice guidelines to assist financial services to address the specific needs of defence force families who may be experiencing financial abuse.
Recommendation 48 That the Australian Government consider the establishment of a reporting process relating to the relative effectiveness of financial products and xviii government services in preventing and addressing financial abuse. This may include a benchmarking process or reporting framework administered by a government agency or through funding provided to an independent non- government organisation or body such as the Australian Banking Association.
Recommendation 49 That the Australian Government make the necessary legislative and regulatory changes to enable the Australian Taxation Office to assume responsibility for government child support collections, replacing the Agency Collect program currently managed by Services Australia.
Recommendation 50 That the Australian Government mandate annual payer and payee declarations to the Australian Tax Office for individuals in private child support payment arrangements; and require appropriate acquittal documentation, including but not limited to bank statements, to substantiate all declarations.
Recommendation 51 That, where an annual payer declaration shows that child support payments are not reasonably aligned with payee child support entitlements, or where an annual payer declaration is not made, Private Collect child support payment arrangements automatically convert to Agency (Australian Tax Office) Collect child support arrangements.
Recommendation 52 That, at the end of each financial year, the Australian Government provide child support payees with refundable tax credits equal to any shortfall in child support payments for the preceding year; and raise a corresponding tax debt against the relevant child support payer, collectable by the Australian Tax Office as a debt owed to the Commonwealth.
Recommendation 53 That the Australian Government undertake a review of the formulas used to determine child support payments; and ensure that the review is informed by the lived experience of victim-survivors.
Recommendation 54 That the Australian Government develop a tax relief model for victim- survivors of financial abuse similar to the United States IRS ‘innocent spouse relief’ provisions.
Recommendation 55 That the Australian Government amend the Corporations Act 2001 to ensure that the company director provisions appropriately recognise family and domestic violence, including financial abuse, as a reason why a director may be regarded as not in fact managing a company.
Recommendation 56 That the Australian Government extend the time period allowed to respond to a Director Penalty Notice in cases of reasonable claims of financial abuse.
Recommendation 57 That the Australian Government undertake a review of current legislative and regulatory settings relating to trusts, with a view to addressing the abuse and misuse of trusts as a mechanism for financial abuse and coercive control.
Recommendation 58 That the Australian Government amend the Social Security Act 1991 to: remove the requirement that a person has to have left their home to qualify for crisis support payment; lengthen the time in which a person has to apply for a crisis payment; and ensure that a victim-survivor is not precluded from accessing a ‘special circumstances’ waiver if a perpetrator lies to Centrelink without the debtor’s knowledge or consent, or the debtor makes a false statement or misrepresentation as a result of coercion or duress by a perpetrator.
Recommendation 59 That the Australian Government establish a standing inter-departmental taskforce to oversee the implementation of safety-by-design principles into all government services.
Recommendation 60 That all relevant government agencies provide training to frontline staff on the identification of domestic and family violence, including financial abuse, and require mandatory reporting of suspected financial abuse
Recommendation 61 That all relevant government entities providing frontline services establish dedicated teams with
