Hidden cost of domestic financial abuse blog banner image
One in six women in the UK has experienced financial abuse in a current or former relationship. Although it is not only women who are affected, over 9 million people, as many as the population of London, have been subject to control, exploitation or sabotage of their money and finances by an intimate partner.
It affects all income brackets, sexes and age groups. And it is very often hidden, because of isolation and control by the perpetrator. Given the numbers affected, it’s likely you’ll know a friend, family member or colleague who is experiencing financial abuse, even though you may not be aware of it.
Victim-survivors of such abuse are more likely to reach out to family, friends or their bank for help as a first step, before they consider reporting to the police. This means the financial services sector has a vital role to play in spotting the signs and offering support where they suspect financial abuse is happening.
Why does this matter to the FCA
Financial abuse can involve the manipulation of financial products and services. It can include loans taken out in the victim-survivor’s name, bank account takeover or the use of joint life insurance policies as a threat.
Under our consumer protection objective, the FCA has a role in securing an appropriate degree of protection for consumers of financial services. We understand that experiencing abuse can leave those affected in vulnerable circumstances, impact their experiences of financial services, and potentially put their financial future at risk.
We care about this issue and want victim survivors to experience better and more consistent treatment from their financial services providers. We have already seen great initiatives from some firms and professional bodies, and we want the sector to build on this.
As a data-led regulator, we’ve looked into the evidence of harm, including experience and research from experts, like our Consumer Partnerships Network members and the Surviving Economic Abuse charity. And we’ve considered how domestic financial abuse manifests across the sectors we regulate.
Working with others to secure improvements
We’ve taken that knowledge to engage with government, trade associations, firms and fellow regulators to drive improvement. We’ve looked at practice both here and in other countries, to help set priorities for focused action. This is a complex problem and there is no simple or quick fix, but we are seeing firms working to improve consumer outcomes, including:
- Innovative new approaches to help affected customers recover. We have seen examples of banks providing safe spaces for victim-survivors to ask for help, or in some cases going above and beyond by providing access to small ‘flee funds’ for victim-survivors.
- Close work with specialist organisations to find ways to give victim-survivors back control of their accounts, including the ability to block abusive messages sent alongside payments.
- New initiatives from industry bodies like UK Finance, the ABI and CII to improve awareness and understanding of issues across members, as well as highlighting best practice and monitoring progress.
There is more that can be done to raise awareness and support consistent treatment of victim-survivors. This includes staff training to recognise the signs, referring victim-survivors to specialist support, and tools that can help consumers regain control. We talk about some of this best practice in our Guidance for Treatment of Customers in Vulnerable Circumstances[2].
Raising expectations of action
The Consumer Duty sets higher and clearer standards of consumer protection across financial services, requiring firms to put their customers’ needs first.
Looking through this lens we encourage firms to be alert to the possibility of coercion and financial control to reduce foreseeable harm.
When a report is made, firms should treat the victim-survivor appropriately, so they do not experience further avoidable harm. This could include how firms treat repayment of any debts and how they are recorded. We signalled our expectations when we wrote to lenders[3] about this in March 2024.
We are embedding awareness of issues around domestic financial abuse throughout the FCA with internal activity and training. We will continue to work with the Financial Ombudsman Service, government, domestic abuse charities and trade associations, to understand how firms are identifying and managing harm for victim survivors of domestic financial abuse. We will also look at whether there’s any further action needed to help the victim-survivors as they rebuild their lives.
If you think you may be experiencing abuse or know someone who is, please reach out for support here[4].