Financial abuse - definitions & signs - Times Money Mentor (2024)

Domestic abuse is more than just physical and psychological harm – it also includes financial harm, which can have devastating and long-lasting consequences.

The police recorded 910,980 domestic abuse-related crimes in the year to March 2022, an increase of 7.7% in a year. Government figures indicate that 85% of domestic partner abuse is non-violent, and of this 69% is emotional or financial abuse.

Economic abuse is now recognised under UK law. If you think that it is happening to you or a loved one, there is help out there.

In this article, we explain:

• What is financial abuse?
• The types and signs of financial abuse
• How do I know if I am a victim of financial domestic abuse?
• How to protect yourself against financial abuse
• Where to get help

What are the sign of financial abuse and where can you get help? Watch our video guide below.

What is financial abuse?

Financial abuse is the use or misuse of finances to exert control over a victim now and in the future, restricting their freedom and dignity. It is often part of a pattern of coercive control characterised by belittling, threatening, intimidating and domineering behaviour.

It is a form of economic abuse (more on this below).

One in six women and one in seven men have suffered some form of financial abuse by a current or former partner, according to the charity Surviving Economic Abuse. It rarely happens in isolation and is often interlinked with other types of abuse – for example, 95% of cases of domestic abuse involve economic abuse too.

Most often, financial abuse occurs within romantic relationships. But it can also involve abuse by a family member, friend or carer – particularly in a situation where the victim is elderly or vulnerable.

Victims can be left without the ability to live independently or the means with which to leave the abusive situation. Even if they are able to leave, the financial fallout can last for many years afterwards.

Examples of financial abuse

It is difficult to get an exact definition of financial abuse because it can take many different forms, but these are some examples:

• Restricting the victim’s access to money or their bank account
• Opening fraudulent and coerced bank accounts that could leave the victim with significant debt in the future
• Taking sole control of the family’s income against the other person’s wishes
• Putting assets, such as the family home or investments, in the name of the abuser
• Putting any debt such as credit cards or bills in the name of the victim

What is the difference between financial abuse and economic abuse?

While similar in behaviour, economic abuse is more encompassing than financial abuse. It is not restricted to purely finances but can include anything that limits or denies someone the ability to change or improve their economic circ*mstances, such as through restricting access to or control of:

• Education and training
• Employment
• Essential services and resources, such as benefits, food or clothing
• Transport, through the removal of someone’s driving licence or passport, for example

Is financial and economic abuse illegal?

The Domestic Abuse Act was updated in April 2021 to include economic abuse. This means that, for the first time in English and Welsh law, economic abuse is a recognised form of domestic abuse, which is a crime.

It covers both the control of a victim’s access to money and also what money can buy, which affects their economic freedom and status.

Who are victims of financial abuse?

Anyone can become a victim of financial abuse whatever their background, wealth, sexuality, ethnicity, age or gender.

While it is more common that the victims of financial abuse are partners or ex partners, it is not restricted to intimate relationships. Abuse can also happen between friends or family members and those in a caring position.

It can often happen in a situation where the victim is elderly, vulnerable or relies emotionally or financially on their abuser – perhaps a new mum.

According to a poll from the investment platform Hargreaves Lansdown, 11% of people have been a victim of financial abuse. This rises to 15% of people aged 18 to 34 and is even higher at 17% for those with children living at home.

What are the types and signs of financial abuse?

People often don’t recognise they’re a victim of economic abuse, so the first step to regaining control of your finances is to understand the signs and seek appropriate help, says Emma Gibbons, vulnerability lead at the free debt-advice provider PayPlan.

According to Surviving Economic Abuse, financial and economic abuse can fall into three main categories:

• Sabotaging access to money, by for example: limiting, stopping or controlling access to money and the ability to gain education or training; limiting the hours you can work; and taking control of your passport or the documentation needed to gain employment.
  
• Financial restriction, such as: controlling how and on what you spend money; making you justify your spending; going through your bank statements and receipts; giving you an allowance or making you ask the abuser for money; gaining access to your benefits; and controlling use of property such as a mobile phone or car.
  
• Economic exploitation, for example: stealing money; misusing joint accounts such as by extending credit card limits while insisting all bills are in the victim’s name; transferring money from a shared account into the abuser’s personal account; and damaging the victim’s property, which could cause more financial harm to them.

How do I know if I am a victim of financial abuse?

As discussed above, it may not seem obvious. Similar to other forms of abuse, financial abuse rarely begins with a major incident.

Instead, it tends to be a slow and steady escalation of types of behaviour, making it hard to recognise both for those within these relationships and for friends and families of victims.

Abusers also often know how to hide their abuse from others outside the relationship. They will often blame the victim, making them feel it is theirs and not their abuser’s behaviour that is unreasonable.

Some of the key indicators of financial abuse include:

• unexplained money loss or a lack of money to pay for essentials such as rent
• credit cards being taken out or bills being put in the victim’s name
• asking the victim to account for exactly what they spend money on
• inability to access or check bank accounts or financial service provider accounts
• isolation from friends and family
• being prevented from working, going to work, or going to college or university
• being asked to change a will

Which in turn could manifest themselves in:

• a change in language in having to ask permission before victims can spend money, or not being allowed certain things
• victims spending less, perhaps “forgetting” their wallet more often at social events
• increased anxiety around spending money
• refusing invites that involve spending money
• needing to borrow money for essentials even though victims are working

Read our article here for more about the dark side of joint finances.

Why you need to address financial domestic abuse

Financial domestic abuse can have devastating consequences both now and in the future for the victim. So it is important to recognise the signals and signs of financial abuse and to act.

• A lack of money or access to money makes it extremely difficult for the victim to escape from their domestic situation.
  
• Being left in debt can have an impact on your credit report, meaning you may struggle to get credit in the future.
  
• If you have been prevented from working, it may affect your ability to get back into the job market.

How to protect yourself from the effects of financial abuse

There are a number of things that you can try to do to protect your finances and prevent the long-lasting impact of financial domestic abuse, according to the credit-reference agency Experian.

(Please note: some or all of these actions could increase your risk of harm if discovered, so take expert advice from a domestic-abuse specialist first.)

These include:

• Avoid joint accounts. If you can, don’t agree to opening one. If you have one already, you can ask the bank to freeze it, meaning that neither you nor your partner can gain access to the funds in that account.
  
• Tighten up security. Make sure that only you know your PIN numbers and online banking passwords. Change them if you think your partner has access already.
  
• Know what is in your name. This includes any joint assets, mortgage or tenancy agreements, bank accounts and credit cards. This will give you a clearer picture of your financial situation.
  
• Be on top of paperwork. Know where important financial and personal documents are kept, should you need to leave in an emergency.
  
• Educate yourself about financial matters. This is so that you aren’t tempted to hand over control to your partner.

How to regain control of your finances

Once you have left an abusive situation, there are actions you can take to try to regain control of your financial affairs and economic future.

1. Assess where you are

Finances can seem scary at the best of times, but it’s important not to bury your head in the sand. Speak to Citizens Advice, a debt charity or a friend and work out where you are financially.

What income and savings do you have? What are your outgoings and debts and who do you owe money to? Write everything down so you can get a much clearer picture.

2. Disassociate yourself financially

Applying for joint credit, such as a joint bank account, usually creates a link called a “financial association” with the other person.

It means that when you apply for credit in the future, the lender may look at that other person’s credit report too when they make a decision; if they have a bad credit score, it can have an impact on your ability to borrow.

You can break this link at any time as long as there are no existing “open” accounts (excluding a mortgage) – it is important to do so. If any joint accounts are in a default status, these are classed as “closed”, meaning that you can still break the link – a process that is sometimes described as “disassociation”.

You must disassociate your credit reports at all the three credit-reference agencies – Experian, Equifax and TransUnion.

3. Speak to your lender

If you still have joint credit agreements together that are open, other than a mortgage, then you should speak to the lender about closing these down first; all accounts opened without someone’s knowledge and consent are considered fraudulent.

Contact the lender directly to investigate the account, or arrange for a credit-reference agency to do so on your behalf.

Once a fraudulent account has been confirmed by the lender, it will be removed from the victim’s credit report.

4. Add a notice of correction

An abuser may force someone to open credit agreements, as well as using existing credit accounts, to exert control – for example, by insisting on the addition of an “additional cardholder” to an existing credit card account.

These debts can still be disputed with the lender, or through a credit-reference agency.

However, in many cases, it may be that they cannot be removed from the report and instead you need to ask the credit-reference agency to add a “notice of correction” to the account on your credit report. It is a short statement, up to 200 words, that is attached to the record to help explain the circ*mstances.

It’s a personal choice on how much information you want to divulge.

5. Add a credit report password

If you are concerned that your abuser will apply for credit in your name, then you can add a password to your credit report to help prevent this. It’s called a password notice of correction and lenders should check it when you apply.

It’s free to do this with all the main credit-reference agencies.

6. Get help

If all this sounds too much or you need extra guidance with your finances, then reach out.

There are lots of free debt charities you can talk to and they can give you a more tailored approach to your financial situation (see below).

Where to get help

Reporting financial abuse is not easy. But if you or your children are in immediate danger, you need to call the police on 999.

You can also turn to a number of charities for free help and advice relating to both the abuse and your finances. These include:

• Refuge – 24/7 freephone 0808 2000 247
  
• Women’s Aid – Live chat function Mon-Fri 08:00-18:00, Sat-Sun 10:00-18:00
  
• Men’s advice line – Freephone 0808 8010 327, Mon-Fri 10.00-20.00
  
• Galop – Freephone 0800 999 5428, Mon, Tues, Fri 10:00-17:00, Wed-Thurs 10:00-20:00
  
• Citizens Advice – Adviceline (England), 0800 144 8848; Advicelink (Wales), 0800 702 2020
  
• PayPlan – Freephone 0800 280 2816, Mon-Fri 8.00-20.00, Sat 9.00-15.00

You might be able to get free legal aid if you have evidence, including from the police or a Refuge agency, that you or your children have been victims of domestic abuse and you cannot afford to pay legal costs. Charities such as Women’s Aid also offer legal aid.

If you need to leave your home in a rush, or your partner has taken control of your finances and you don’t have access to cash, then contact your local authority to see if they can help with emergency support.

Banks also have a duty of care to support you and treat you fairly if you report domestic abuse to them. Some offer specialist teams for the care of vulnerable customers, and you can ask to talk to them.

Thanks to Experian and PayPlan for their assistance with this article.