The Insurance Code of Practice requires insurers to respond appropriately to family violence circumstances. The ICA has also published an industry Guide to Helping Customers Affected by Family Violence.
Some issues may be resolved in your client’s favour if the insurer’s internal dispute resolution department is aware of DFV circumstances. Our experience suggests that an insurer might, in some cases, pay the ‘innocent’ insured, even if the co-insured has caused the loss. Some major insurers have now added a clause to their policies (starting late 2020) stating that they will consider paying compensation in these circumstances).
Raise any concerns or disputes with Internal Dispute Resolution (IDR) Department at the insurer, and if unsuccessful consider lodging a dispute with the Australian Financial Complaints Authority (AFCA) previously the Financial Ombudsman Service).
Under the General Insurance Code of Practice, insurers must take into account the financial circumstances (hardship) of the insured (for example if demanding payment of excess) or third parties they are pursuing for payment (Section 8). While a third party can’t raise a dispute with AFCA, a complaint to the Code Governance Committee of a Code breach may be effective in achieving an outcome for a non-insured.
The Australian Banking Association has developed an industry guideline on preventing and responding to domestic and family violence (2021)
Banks will communicate with one borrower about a joint debt without involvement of the other borrower if necessary due to family violence,
Our experience is that some banks may consider reducing, or waiving, debts which arise due to family violence where significant financial hardship is caused.
AFCA have published approach to Joint Facilities and Family Violence.
Where one co-borrower has received little, or no, benefit from a joint loan, AFCA may determine that that borrower is not liable for the debt (for example see FOS Case 412040). Here are a few other relevant AFCA cases involving a joint loan to repay one partner’s debt and removal of a credit default which was incurred as a result of domestic and family violence,
Contact IDR at the bank (or other financial institution) and if unsuccessful consider lodging a dispute with AFCA.
Australia Financial Complaints Authority (AFCA) is finalising its approach to disputes where there has been a Family Law property order or settlement, which we expect to be published mid 2022. AFCA says they will enquire about any Family Law property order/settlement and may reject the dispute if it establishes that the person was compensated for the loss by the Family Court. However, AFCA will only exclude a complaint if there are compelling reasons to do so.
This is relevant to a complaint against a financial service where the other account holder has withdrawn funds without authority, or where a debt is incurred as a result of coercion, where the conduct of the financial service may have contributed to the loss.
This guide for financial counsellors and community lawyers “Credit Reporting and Economic Abuse” can help you advocate for clients regarding their credit reports.
The Australian Banking Association have published credit reporting guides, including one for financial counsellors. Not specifically DFV related, but includes the 1/7/22 reforms.