NSW needs to address coercive control, but this rushed law is not the way to do it
Opinion piece by Gayatri Nair. https://www.theguardian.com/commentisfree/2022/nov/03/nsw-needs-to-address-coercive-control-but-this-rushed-law-is-not-the-way-to-do-it
Domestic abuse, company directors and business debt
Marion’s husband was jealous of her contact with work colleagues and pressured her to give up her nursing job. When she decided to run a small cleaning business, the coercive control escalated.
Marion’s husband insisted she not do paperwork at home and took control over the business finances. He controlled every aspect of her life, refusing to let her see a doctor for pain in her arms, insisting she take sedatives he provided. When Marion tried to sell the business, he sabotaged the sale by being abusive in front of potential buyers.
Marion escaped the relationship when she found out she was pregnant but found herself with a heap of debt. On an accountant’s advice, Marion and her husband were both company directors, but although jointly responsible, her husband disappeared and couldn’t be found by creditors.
Marion was left with nothing, went bankrupt and struggled to start her life again.
Reina owed almost $10 million in relation to an IT business run by her husband. Her husband forced her to sign to be a director of his company, right at a time the business was getting into financial trouble. Reina received no benefit from the business as her husband controlled her access to funds, and she was not involved in running the business. Her husband coerced her to sign, or forged her signature on director’s guarantees for loans, and unbeknown to her, was incurring debt that the business couldn’t pay. As a director, this meant that Reina could be prosecuted for the business trading while insolvent. With the assistance of a specialist family violence financial counsellor, and pro-bono legal help, she has been released from liability of about $8.2 million of the debt fraudulently obtained by her husband, but Reina continues to battle with liquidators, creditors, and the tax office.
Financial abuse is a common form of family violence, and most women who seek help from family violence services have experienced it. Victim survivors can struggle to re-establish themselves due to the financial impacts, which are even more complex when company directorships and business debts are added to the mix. Perpetrators of family violence often set up complex webs of companies to hide assets from their partners in anticipation of Family Court proceedings.
In addition to massive debt obligations, company directors who breach their obligations can receive significant civil or criminal penalties.
Advocates want to see more awareness of the impacts of family violence by liquidators and the Australian Securities and Investments Commission, when considering whether to prosecute a director for insolvent trading or other offences. Advocates argue that defences to some breaches of director obligations should be broadened to recognise family violence, separately to illness, as a reason a director may not have been able to meet their legal responsibilities.
Advocates claim that the Australian Taxation Office should be more alert to the impact of family violence, and like many financial services businesses, they should have staff who are specially trained to identify and respond to these cases when dealing with debt recovery or penalty notices.
We understand the importance of retaining the integrity of the system, but as the community better understands family violence and coercive control, the laws need to respond.
These cases are complex and time-consuming to untangle, and most people can’t get the help they need. Pro-bono lawyers and insolvency specialists provide some assistance, but we need better recognition of family violence in the system to prevent business debt being used as a weapon by perpetrators of family violence.
Names have been changed.
Service model to provide financial abuse support
A number of EARG organisations provided their valuable expertise and insights into this new report: Addressing financial abuse: a collaborative service model for legal and non-legal support, supported by Commonwealth Bank, in partnership with Redfern Legal Centre (RLC) and the Consulting & Implementation Services. The report outlines a best practice service model for organisations who work with victim-survivors of domestic violence and financial abuse. It explains how community organisations can provide a more holistic service for clients who are impacted by domestic violence and financial abuse, enabling them to gain better access to legal and social service supports without the need to individually source these broader services. Key recommendations include the need for both legal and non-legal trauma informed and culturally appropriate support, the importance of collaboration between legal and socio-legal support services, the value of human resources and the need for capacity building and reforms.Best
Five years of business and Government reforms
Since the Victorian Royal Commission into Family violence handed down its recommendations in 2016, there have been significant changes in the way that many businesses, and some sections of government, tailor their services to better respond to customers experiencing family violence.
EARG has had input to most of these reforms, with a focus on financial outcomes for victim survivors and how economic abuse issues are handled by business.
There is still work to do to ensure that these approaches are embedded within businesses, and that there is ongoing training of staff and reviewing of processes to ensure customers benefit.
Business
Banks – The Australian Banking Association has produced, and updated, an industry guideline[1] on responding to domestic and family violence and made reference to DFV in the Banking Code of Practice. The ABA examined some issues arising with joint accounts and DFV, and were successful in having legislation changed, which confirmed that banks could open an account without the required 100 points, where the customer lacked access to that information due to DFV. Individual banks have developed some effective processes and programs to respond to these issues.
Insurance – The Insurance Council of Australia developed a guide to helping affected customers[2] and referred to DFV in the Insurance Code of Practice. Insurers continue to consider how to respond to more complex issues (for example some insurers have recently amended their policies to take into consideration compensating for damage caused by a co-insured in family violence circumstances)
Toll Roads
Transurban (which has roads in Eastern States) has introduced a number of measures to respond to customers experiencing DFV including abuse by incurring charges and locking online accounts.
Telecommunications
Industry guidance produced and various responses developed by some businesses including transferring accounts in DFV circumstances (where this would not usually be possible because the account is in another person’s name).
Individual businesses – While we tend to focus across industries, we have raised issues with some individual financial services (eg credit providers, debt collectors) which has resulted in improvements in their response to DFV issues.
Regulators
Energy and Water (Victoria) – The Essential Services Commission (Vic) amended the Energy Code to include obligations on energy retailers to have family violence policies and to meet minimum standards of conduct, including staff training, debt management practices and improved account security. These provisions are enforceable by the regulator, which provided workshops for the businesses and published detailed guidance. The regulator also amended the Water Code to place an obligation on water businesses to develop robust family violence policies.
Energy (National) – The national energy regulator is currently considering introducing rules regarding responding to customers experiencing family violence.
Debt Collection Guidelines – Changes were made to the ASIC/ACCC Debt Collection to take into account some DFV issues. (Dec 2020).
Government
Superannuation – the Commonwealth Government has recently introduced a Bill which would make it easier for parties in Family Law proceedings to obtain information about the other party’s superannuation funds (thereby preventing one avenue of financial abuse).
Fines Victoria – The Victorian Government introduced through legislation a Family Violence Scheme. Victim survivors can apply to Fines Victoria to have fines withdrawn if family violence substantially contributed to the offence and won’t be required to name the person responsible for the offence if it’s not safe to do so.
Tenancy laws – Victoria – The Victorian Government amended residential tenancies laws to enhance protections for tenants experiencing family violence. This included allowing the tribunal to change tenancy agreements excluding the perpetrator, allowing a victim survivor to make reasonable security modifications and preventing negative listings on a tenancy data base against a victim survivor.
VicRoads (Vehicle registration, licensing etc) – have introduced special contact point and processes (including training of staff) to respond to customers experiencing DFV and requiring assistance from VicRoads
[1] https://www.ausbanking.org.au/wp-content/uploads/2021/05/ABA-Family-Domestic-Violence-Industry-Guideline.pd
[2] https://insurancecouncil.com.au/wp-content/uploads/2020/01/2021_07_REPORT_Family_Violence.pdf
DFV and Debt – Needs more than financial hardship response
Some businesses are providing sophisticated responses to customers experiencing domestic and family violence (DFV), but some are too quick to focus solely on financial circumstances rather than the impact of abuse.
A range of reforms over the past 4 years (by businesses, Government, and regulators) have led to better financial outcomes for some victim survivors who are better able to re-establish their lives as a result.
The link between business processes and DFV is better understood, including the misuse of online services for abuse, access to online accounts, and use of customer data by perpetrators to locate or abuse a victim survivor. However, financial counsellors and community lawyers say that when it comes to debt issues, some businesses are too quick to apply their processes for financial hardship, without considering the impact of DFV.
Specialist family violence financial counsellor, Linda Wright, says “Debt is a key weapon for abusers, and often the main barrier to a victim survivor’s recovery.” The more responsive businesses consider the impact of the abuse on how the debt was incurred, or not paid, as well as any financial hardship – but being in financial hardship shouldn’t be a pre-requisite for the business to respond.
Linda says that her clients have good experiences with businesses. “For example, one bank cancelled a credit card debt once they understood there was coercion by the perpetrator to apply for the card, and it hadn’t been used for the benefit of my client. An energy business also cancelled a debt which was in my client’s name but was incurred after she fled the violent relationship. In these cases, my clients’ financial circumstances weren’t relevant to the DFV situation, and the businesses understood that.”
Dacia Abela, economic abuse lawyer at WEstjustice, says where a person has experienced DFV (which usually includes economic abuse) businesses shouldn’t insist on financial statements, but should consider a number of factors in determining an appropriate response including:
- Was the liability incurred as a result of DFV? For example, was their coercion, or was the victim survivor unaware payments were not being made?
- Did the creditor’s conduct or processes contribute in any way? (regardless of whether the creditor was in strict compliance with the law)
- Are there compassionate grounds for restoring the victim-survivor to the position they would have been in without the abusive behaviour, even if the customer isn’t experiencing severe financial hardship?
New funding ensures EARG’s work can continue
The Economic Abuse Reference Group (EARG) will continue to contribute to better financial outcomes for people experiencing domestic and family violence (DFV), thanks to a grant from the Ecstra Foundation.
EARG is a network of community organisations (financial counselling services, family violence services, community legal centres and women’s services) which work together to influence government and industry responses to the financial impacts of domestic and family violence.
The multi-year funding commitment provides for a DFV expert to build on the policy work to date, to facilitate information and resource sharing and to co-ordinate input to law reform, reviews and industry policies.
Over the past five years, EARG has provided expert input to law reforms (such as tenancy laws, infringements laws and regulation of utilities in Victoria) and industry regulation and guidance (such as industry codes for insurance and banking).
These reforms demonstrate that a wide range of businesses and government bodies can have a positive impact on people experiencing economic abuse and other forms of family violence; and can help reduce the risks of further abuse.
There is much more to be done, including helping other states replicate the Victorian Government reforms . The EARG will provide guidance and feedback to the many corporate, finance, charitable and government organisations that are actively engaging in addressing economic abuse through their work and to other stakeholders that are in the early stages of developing DFV responses (such as credit reporting, toll road companies and local government).
The Ecstra grant will enable EARG to continue its policy reform agenda and to extend the EARG network nationally, including collaborating with the recently formed EARG in NSW (also funded by Ecstra).
Background
EARG was established shortly after the release of report of the Victorian Royal Commission into Family Violence to provide input to the implementation of recommended reforms. The network has grown from an initial five Victorian organisations, to over 20 organisations across Australia. Co-ordination of the network was funded by the Victorian Government from 2017 to August 2020.
See EARG’s report, Responding to Financial Abuse Report – 2020, for details of the reforms and the work of EARG.
https://earg.org.au/wp-content/uploads/Responding-to-Financial-Abuse-Report-2020_Digital.pdf
Ecstra is a not for profit organisation committed to building the financial wellbeing of all Australians within a fair financial system. Ecstra works with organisations across government, community, business, education and research as part of the National Financial Capability Strategy.
New report shows we are making a difference.
We have seen better financial outcomes for family violence victim survivors over the past three years, due to the work of government, regulators and business. A new report by Carolyn Bond and Dr. Madeleine Ulbrick examines what has been achieved, and what remains to be done.
In 2016, the Victorian Royal Commission into Family Violence (RCFV)[1] recommended action by government, regulators and business to address economic abuse. The Chair of the Victorian Essential Services Commission reflected on what many regulators and businesses were likely to had thought at that time “We’re economists. What do you want me to do about an issue as pervasive and complicated as family violence?”[2] However, the RCFV led to major changes in thinking and in practice.
The “Responding to Financial Abuse – Full Report 2019”[3] (Report) is written on behalf of the Economic Abuse Reference Group (EARG). The EARG is made up of 20 community organisations who work collectively to influence industry and government responses to reduce the financial impact of family violence.
Family violence victim survivors suffer financially from the impact of physical violence and economic abuse. Physical violence can lead to additional health costs, being unable to work, destruction of property, or costs to escape and become re-established. Economic abuse, which is a form of family violence, includes coercion to sign for debts, denying access to household funds and refusing to pay for household bills. Physical and economic abuse are closely linked, as “denial of material security [corresponds] with denial of physical security”.[4]
The Report focusses on the response by industry and government to the 15 RCFV recommendations[5] that address financial security and economic abuse aimed at:
- Enhancing the ability of community organisations to prevent and respond to financial stress;
- Changing business processes to reduce the financial impact of family violence on customers; and
- Changing infringement and tenancy laws.
In response to these recommendations, the Victorian Government funded family violence training for all financial counsellors, appointed 21 specialist family violence financial counsellor positions, and funded the Economic Abuse Reference Group to co-ordinate community input to government and business reforms.
Financial counsellors have extensive knowledge of a range of areas of law and policy, including consumer credit law, debt enforcement practices, the bankruptcy regime, industry hardship policies and government concession frameworks. The family violence financial counsellors have close links to family violence services and can support clients to take advantage of the relevant laws and business processes. They also influence laws and policies through broader system advocacy informed by their casework.
Since 2017, financial counsellors have reported better responses from financial institutions, increased understanding of family violence by businesses, release from payment of some fines and debts and, in some cases, tailored responses to complex situations experienced by their clients. For many clients, these responses have improved their personal safety and allowed them to re-establish their lives.
The Report describes how many larger industry organisations across banking, insurance, utilities and telecommunications, have demonstrated leadership with commitment to dedicated policies and often dedicated staff.
Reforms include family violence guidance published by the Australian Bankers Association and the Insurance Council of Australia, obligations for Victorian energy and water businesses to have effective family violence processes for customers, and a process for seeking release from fines that are incurred as a result of family violence.
More remains to be done, however. While many large businesses have established effective teams to respond to these customers, there is a need for broader staff awareness to ensure that customers who don’t have an advocate receive a similar response to those who do. For example, some large debt collection firms have someone who can resolve cases when contacted by an advocate such as a financial counsellor, but when an unrepresented person contacts the call centre, the response does not result in a resolution.
The Report outlines issues requiring further attention including local government’s response to rates, car registration transfer, and credit reporting. There is also a need for other states to catch up with Victoria by resourcing specialist family violence financial counsellors, and reforming tenancy, fines, energy and water laws.
Circumstances related to the COVID-19 pandemic are likely to lead to an increase in family violence and increase the risks of economic abuse[6], as well as problems in accessing assistance services.
Community services will play a vital role in identifying, and responding to, new economic abuse risks. At the same time, the community sector and industry must ensure we don’t ‘drop the ball’ on our ongoing work to reduce the financial harm experienced by family violence victim survivors.
Carolyn Bond is project manager of the Economic Abuse Reference Group
Dr. Madeleine Ulbrick recently completed a PhD thesis ‘A Man’s Home is His Castle. And Mine is a Cage’: A Feminist Political Economy Analysis of Economic Abuse in Victoria.
[1] Victoria, Royal Commission into Family Violence, Summary and Recommendations (2016), p1.
[2] Dr Ron Ben-David: What can an economic regulator do about family violence? , Speech delivered at family violence resources review forum, Melbourne, 30 August 2018 (Essential Services Commission, 2018).
[3] Carolyn Bond and Dr Madeleine Ulbrick, Responding to Financial Abuse Full Report (Economic Abuse Reference Group 2019).
[4] Dr Madeleine Ulbrick, ‘A Man’s Home is His Castle. And Mine is a Cage’: A Feminist Political Economy Analysis of Economic Abuse in Victoria, Doctoral Thesis (Monash University 2019).
[5] Victoria, Royal Commission into Family Violence, Final Report Vol IV, P119.
[6] Family Violence, Economic Abuse and COVID-19 (Economic Abuse Reference Group 2019)
Family violence, financial abuse and COVID-19
Domestic and family violence increases in times of disaster[1], and services are already reporting an increase in calls for help[2] as a result of COVID-19. Contributing risks include isolation with a violent partner and being cut-off from community supports.
Other factors specifically increase the risks of financial abuse. Financial abuse (also referred to as economic abuse) is a form of family violence which commonly accompanies physical and emotional abuse.
The ability to access superannuation opens up an avenue for an abusive person to coerce, or force, their partner to access their funds when this is not in the person’s best interests. New rules allow people to draw down up to $20,000 of their superannuation over two years. This could cost $50,000[3] in retirement income, or about a year’s worth, according to Super Consumers Australia, who suggest this should only be done as a last resort.
According to community services which are members of the Economic Abuse Reference Group, the social security system also presents risks, particularly for women. The woman is generally liable for debts incurred for certain payments if their partner doesn’t provide accurate income information, and women are too often coerced into making false claims where the funds are used for another person’s benefit. It is likely that the increase in the numbers of eligible claimants, and the new range of benefits available, will lead to an increase in this form of abuse.
Risks related to family businesses are likely to increase as businesses are under greater stress. One partner may be coerced into signing documents even though they have little involvement or understanding of the business finances. After a relationship breaks down, it’s not uncommon for one partner to have responsibilities as a director, or to have large debts, which they have been unaware of.
Financial stress may also see an increase in other forms of financial abuse that we see in our work, for example drawing down on mortgages without the other partner’s knowledge, withholding money for necessary living expenses and coercing the partner to sign loans.
The increase in online (rather than in-person) shopping, and move away from stores accepting cash, may also allow a perpetrator to have tighter control over the other person’s finances.
We have made significant progress in Australia over the last two or three years to improve government and business awareness of economic abuse, and responses to helping those who are experiencing it.
With the focus on responding to the pandemic, it’s important that community, industry and government continue to be alert to the risks of domestic and family violence, including economic abuse.
Banks, energy, water and telecommunications companies have processes to respond to financial hardship, and also now have processes to help customers who are experiencing financial abuse. People should check their provider’s website, call them and tell them they are experiencing abuse or get help from a free financial counsellor. There are specialist family violence financial counsellors in Victoria and some other states.
If you, or someone you know, is experiencing financial abuse, call 1800 RESPECT or they can contact free financial counselling by calling 1800 007 007.
Carolyn Bond
[1] https://awava.org.au/2020/03/25/blog/self-isolation-means-many-women-will-be-trapped-with-their-abuser?doing_wp_cron=1585181929.6245489120483398437500
[2] https://www.womenssafetynsw.org.au/impact/publication/summary-report-impact-of-covid-19-on-women-and-children-experiencing-domestic-and-family-violence-and-frontline-domestic-and-family-violence-services/
[3] https://www.choice.com.au/money/budget/cost-of-living/articles/coronavirus-support-payments-how-do-they-work
Report on Victorian response to financial abuse
This refers to a 2018 report which covers activity prior to the Victorian Royal Commission into Family Violence until late 2018. A more recent report, covering the period from the Royal Commission until December 2019 can be found here.
Collaboration between Government, community and business sectors in Victoria have led to significant reforms which improve the economic wellbeing of victim-survivors of family violence.
A new report describes developments over the past 20 years including recognition of economic abuse as a form of family violence and efforts to improve financial outcomes for family violence victim-survivors.
Read the Responding to Financial Abuse Report (2018)
Auditing the water industry’s family violence response
The Victorian water regulator audits water businesses annually to check compliance with customer services codes. This year’s audit, the Essential Services Commission (ESC) will focus on the family violence provisions of the code which must be implemented by 30 June 2018.
The audit will test whether the minimum family violence requirements are addressed in company policies, as well as whether:
· training has been delivered, and who was trained
· family violence included as an eligibility criteria for hardship assistance
· call handling processes for customer affected by family violence.
Progress will then be checked next year.
In 2018-19, the ESC is developing a qualitative reporting framework in partnership with the water sector, community groups and family violence specialists. This framework will seek to identify whether staff and customers who experience family violence are benefitting from water business policies and whether outcomes would be improved by further changes.