How to identify and address economic abuse

This constitutes economic abuse, which is now recognised as a form of domestic abuse. It was recently defined in the Domestic Abuse Act 2021 as involving “behaviours that interfere with an individual’s ability to acquire, use and maintain economic resources”. And it is a very serious problem for its victims.

Research by The Co-operative Bank and charity Refuge published in 2020 revealed that 8.7m people in the UK had experienced economic abuse.

Following their experience, 21 per cent were left with debts that they felt unable to pay and for more than a quarter (26 per cent) it resulted in a negative effect on their credit rating.

Covid-19 increased the incidence of economic abuse, according to the report, which found that for 18 per cent of all respondents, economic abuse began during the pandemic. 

There are many forms economic abuse can take, including refusing to let a partner open a bank account or otherwise restricting their access to money.

But it goes much wider than banking, as Johnny Timpson, commissioner at the Financial Inclusion Commission, points out. He says: “Economic and financial abuse is a key issue for financial services firms.

"The banks are doing a great deal of work in this area, but this is far from being solely a banking issue.”

How to identify economic abuse 

For some, economic abuse extends into how other financial products are used against them. When it comes to identifying possible economic abuse, joint policies can be a red flag, according to Nicola Sharp-Jeffs, founder and chief executive of Surviving Economic Abuse.

“Joint policies are a channel for economic abuse as we know that some abusers name a victim/survivor on the joint policy without their permission or knowledge, and then use this as a threatening tactic.

"If the abuser is the policyholder, the victim/survivor doesn’t have the authority to ask the provider and verify if this is the case. In some circumstances, the abuser will gain from life insurance, for example, through an undetected murder or suicide linked to the abuse.” 

To be able to support clients who may be suffering from economic abuse, advisers first have to be able to identify it – preferably right from the interview stage. 

Avoiding the key questions, no matter how difficult, is often not helpful, so advisers are encouraged to be brave and have bold conversations with compassion and professionalism Alan Richardson, Lifesearch

But it may not be immediately noticeable, as adviser Phil Anderson of Phil Anderson Financial Services says: “In such a busy world, where everyone wants everything so quickly, it could be easy to miss signs of economic abuse.”

Alan Richardson, head of business protection and group at LifeSearch, agrees that vulnerability may not be apparent straightaway.  

“Advisers cannot assume that vulnerability is always going to be immediately obvious, or that customers will be always forthcoming," he says. 

"Conversations should be exactly that and often entail more listening than talking. Avoiding the key questions, no matter how difficult, is often not helpful, so advisers are encouraged to be brave and have bold conversations with compassion and professionalism.” 

Anderson agrees that listening is a high priority when it comes to noticing any potential issues: “The main soft skills you need are good listening skills. Experience helps too – the more experience you have, the more it helps to spot red flags.

“For instance, we deal with a lot of older clients and we keep an eye on them. It’s all just about being diligent.

“Good communication is also key, and it helps to meet people in person. Covid required people to do so much online, but when you meet clients in a face-to-face meeting, you can pick up on things more easily.”  

Additionally, Anderson notes that the extent of mental health issues seen to date may just be the tip of the iceberg. “Mental health issues are arising a lot more often now due to Covid, including the impact of bereavement or loss of income, for instance. 

“Much more needs to be done. We all have a duty to help people who are vulnerable.”

Protection specialist Kathryn Knowles of Cura Financial Services has a tried-and-tested suggestion for advisers on how to identify economic abuse, and also how to broach the subject with the client, as she explains: “One way an adviser can try to identify economic abuse is by seeing if there are any barriers to speaking with someone’s partner. If there is any resistance, I explain the importance of ensuring protection is in place for both people. 

“If this doesn’t work, I then say that I need to speak with the partner because they are the person that will either benefit from a claim or be on hand to help process it, and that they therefore need to know where everything is and what is planned.”  

Richardson takes a similar view: “Understanding the financial involvement of a spouse within the household is an important part of building the overall protection advice recommendation.

"As this continues throughout the advice process, advisers are often well-positioned to recognise possible economic abuse.”

But he also re-emphasises the challenges involved: “Having conversations about sensitive subjects that perhaps are not the norm is difficult. It takes empathy, knowledge and experience to do this well, and dabbling can sometimes cause more problems than it fixes.

"Advisers who aren’t experienced or comfortable can refer clients to a range of specialist advisers wherever necessary.”

Fiona Nicolson is acting deputy features editor at FTAdviser