By Liam Lisu

Financial abuse is a pervasive issue that, unlike physical abuse, operates invisibly through bank statements, loan applications, and account transactions. Although still on the fringes of finance, financial abuse is slowly but steadily gaining visibility.

Banks can do more than manage transactions — they can provide lifelines to victims seeking independence, transforming from passive service providers to proactive protectors. By identifying the signs, establishing strong support systems, and partnering with domestic violence organisations, banks can play a crucial role in protecting such vulnerable individuals.

Understanding Financial Abuse

Who Are the Victims?

Although many view this as an issue that affects women, the reality is that financial abuse can occur in any relationship – husband-wife, mother-child, elder-carer – irrespective of gender. While anyone can fall prey to financial abuse, certain groups are disproportionately affected more than others:

  • Single Parents: Nearly 48% of single parents surveyed by financial charities StepChange and Gingerbread in 2021 experienced economic abuse, including controlling resources and limiting access to funds.
  • BAME (Black, Asian, Middle-Eastern) Women: BAME women face higher vulnerability due to systemic barriers, financial dependence, and cultural isolation.
  • People with Disabilities: Disabilities increase dependency on partners, leaving them more vulnerable to financial exploitation. They also have a harder time accessing higher-paying employment opportunities.

While more common in low-income households, financial abuse also occurs in affluent ones, where wealth may mask financial control.

How Does it Happen?

According to UK charity Surviving Economic Abuse, financial abuse manifests in three ways:

  • Blocked Resources: Perpetrators may prevent victims from accessing education, employment, benefits, or financial accounts.
  • Controlled Resources: Victims have their purchasing decisions dictated, are forced to justify expenses, or lose access to shared assets like vehicles or property.
  • Prolonged Exploitation: Abusers create coerced debts, misuse joint accounts, or damage property to impose long-term financial burdens on victims.

Long-term Impact on Victims

Financial abuse leaves long-lasting scars, often burdening victims with debts that damage credit scores and limit access to housing, loans, and other financial services. Abusers may also sabotage careers or confine victims to low-paying jobs, deepening financial instability.

Because of this, rebuilding independence may be nearly impossible for many victims, especially those without essential documents like formal identification or passports. When children are involved, the impacts also become intergenerational, perpetuating cycles of economic insecurity and dependency.

The Role of Financial Institutions

With an understanding on how financial abuse can impact victims, the UK Financial Conduct Authority (FCA) created the Vulnerability Guidance Framework below to assist financial institutions to detect, support, and protect victims:

+ Establish Secure and Confidential Reporting Mechanisms. Victims of financial abuse require discrete channels to seek help without fear of exposure or retaliation. Banks can establish private helplines for sensitive disclosures, secure email options, and confidential in-branch consultation spaces. These measures help ensure victims feel supported and protected when reporting abuse.

+ Train and Empower Banking Staff. Recognising and addressing financial abuse is vital. Employees must be trained to detect red flags and respond accordingly. These key indicators include:

  • Behavioural cues: Nervousness, hesitation, or visible distress, especially if a third party dominates conversations.
  • Unusual account activity: Frequent large withdrawals, sudden account closures, or repeated changes to account details.
  • Verbal hints: Uncertainty about finances or mentions of imposed restrictions.
  • Digital signs: Unauthorised access to accounts or unusual online activity.

Frameworks like the TEXAS model can also help guide staff in managing such situations:

  • Thank customers for sharing their situation;
  • Explain how information will be handled securely;
  • Seek explicit consent for data use;
  • Ask questions to clarify their needs; and
  • Signpost victims to internal support teams or external organisations.

+ Collaborate with Domestic Violence Organisations. Partnering with domestic violence charities equips banks with specialised training, referral pathways to resources like counselling and legal aid, and support for policy development. These collaborations enable banks to empower victims, addressing their immediate needs and helping them regain long-term financial independence.

+ Protect Customer Confidentiality. Banks should avoid sending sensitive correspondence to shared addresses or accounts. More secure portals and robust protocols must be employed to block abusers from accessing victims’ information, especially in joint account scenarios.

+ Apply Immediate Practical Measures. To address any immediate needs of vulnerable customers, banking staff can take mitigating measures for its customers:

  • Setting up independent accounts for victims to regain financial autonomy;
  • Offering emergency financial support to stabilise victims in crisis, such as waiving overdraft fees or providing short-term loans;
  • Restructuring or forgiving loans for victims burdened with debt accrued under duress; and
  • Flexible banking services like budgeting tools or fee waivers for victims to regain financial control.

Progress Monitor

Some industry bodies and authorities have already issued guidance and recommendations on how banks in different jurisdictions should respond.

In the UK, the charge is led by numerous non-profits and charities such as UK Finance whose work has informed government bodies, namely the FCA whose Guidance on the Fair Treatment of Vulnerable Customers continues to set the standard with the Domestic Abuse Act 2021 as the legislation that empowers the safeguarding of victims. The Act defines economic abuse in domestic situations as “any behaviour that has a substantial adverse effect on an individual’s ability to (a) acquire, use or maintain money or other property; or (b) obtain goods and services.”

Here, financial abuse is classified as a subset under economic abuse as it specifically relates to control of another person’s financial affairs. UK Finance clearly states that financial abuse “may manifest itself as financial and economic control through restriction, exploitation or sabotage – creating dependency and/or insecurity” and legislation covers all persons and relationships.

In Asia Pacific, the Australian Parliamentary Joint Committee on Corporations and Financial Services resolved on 2 April 2024 to commence an inquiry into the financial services regulatory framework in relation to financial abuse; the report is set to be tabled soon. Industry lobbies such as the Financial Advice Association Australia have also put on the record that its financial advisers are “uniquely positioned to detect signs of financial abuse.”

However, at a deeper level, tackling financial abuse goes beyond regulatory compliance — it’s a societal issue and should be seen as an extension of a bank’s corporate social responsibility. In this way, financial institutions have the power to disrupt cycles of dependency and foster more resilient communities by providing safety, support, and a pathway to recovery for those impacted by financial abuse.

Liam Lisu is a content associate with Akasaa, a publishing and strategic consulting firm.