FCA must help industry tackle financial abuse, says CAB

Financial abuse is a common problem that must be addressed by parties including the FCA, credit trade associations and individual firms, Citizens Advice has warned.

In its 16-page report, Controlling Money, Controlling Lives: Financial Abuse in Britain, the charity warned that cases where a partner or relative exerted excessive financial control, harm or exploitation were “not uncommon”.

Research carried out in August and September 2014 among 627 people within the CAB network found that nine out of 10 of the charity’s advisers said they had supported victims of financial abuse.

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The report said: “Although there are examples of good practice, we also find a lack of understanding or willingness to consider financial abuse in the banking or credit sector, or with government departments and agencies that pay benefits.

“This can leave victims in dire financial straits, liable for debts they never agreed to, at the mercy of the perpetrator who can still control and access money, and ultimately prolong suffering at the hands of their abuser.”

It also called on creditor trade associations, individual firms and the FCA to write best practice guidance to tackle financial abuse and support victims, and to recommend how to freeze, split or rearrange finances in cases of abuse.

In addition to this, the report called for the department for work and pensions to look at how benefits are distributed within families in cases of abuse, and for the ministry of justice to review the availability of legal aid in cases linked to financial abuse.

What sort of cases did CAB advisers encounter?

73% saw cases where the perpetrator had got the victim to take out credit.

43% had seen cases where the perpetrator stole from the victim.

57% had seen cases where the perpetrator controlled access to the victim’s income, banking or savings.

77% of cases were where the perpetrator had not contributed to joint bills.

Source: CAB

Adviser view

Paul Holiday, IFA for Norwich-based GreenSky Wealth, said: “A lot of the time financial abuse probably happens when one person takes control and the other person is completely ignorant about it, so it never becomes an issue.”

Right to reply

A spokesman for the FCA said: “We are focused on ensuring that firms treat consumers fairly, and what that means depends on each consumer’s circumstances so we would expect that particular care is given to the vulnerable.

“In the consumer credit market there is guidance in place, and we published a study on how the financially vulnerable are treated by the industry. We are also currently undertaking some further work which we expect to publish next year.”