Uncovering hidden signs of financial abuse

This article was current at the time of publication.

For those working on the frontline, financial abuse is alarmingly prevalent. It affects people from all walks of life. 

Some 15 per cent of women in New Zealand have experienced some form of economic harm by an intimate partner. In Australia, one in six women and one in 13 men are victims of financial abuse from a partner. 

Financial abuse is often a tactic used by perpetrators of family violence to control, manipulate and isolate their victims. It occurs when one partner restricts or controls the other’s access to financial resources, often with the goal of maintaining power and control over them.

What is clear is economic abuse can also occur alongside other forms of family violence, including physical and mental abuse. It has devastating consequences for the victim survivor, says Ayesha Scott, Adjunct Senior Lecturer, Auckland University of Technology and Senior Lecturer in Finance & Financial Planning, Griffith University.

Defining financial abuse

Scott says abuse can be identified several ways. “It could involve restricting access to money or bank accounts, concealing financial details, or taking on debt without the other person’s consent. It may also include undermining job or educational prospects, or more commonly after separation, manipulating financial circumstances to reduce child support obligations.

“The perverse thing is that the victim is guilty until proven innocent and the burden and cost is on them to prove it, which they can't afford so they just end up with the debt,” she notes. 

Financial abuse not a criminal act

In New Zealand, economic abuse is not categorised as a crime under legislation. However, it can be partly addressed through the Family Violence Act 2018, where certain forms of economic abuse may be recognised under psychological abuse, says Brittany Goodwin, Senior Social Policy and Advocacy Advisor, Good Shepherd New Zealand.

“Recognising it takes time for legislation to change, we are advocating for operational changes within creditors, banks and lenders to do what they can to not only recognise economic harm and help people through referral pathways, but also to look at how debt can be wiped where appropriate,” she says.

Signs accountants should know

For accountants, recognising the signs of potential abuse might include the following:

• a client asking to add someone as a company director
• clients suddenly showing signs of financial distress or difficulty accessing their own accounts
• unexplained changes to financial arrangements or assets being transferred without clear consent
• one party having excessive control over financial decisions and access to important documents, such as bank statements or identification.

“A major focus for us is ensuring that banks, financial services and accountants — when relevant — are able to recognise these signs and, most importantly, become more aware that economic abuse is happening,” says Goodwin.

Advice for practitioners

Michael Parker, an Australian lawyer who has been involved in pro bono financial abuse cases, believes practitioners must be conscious of where their instructions are coming from. 

“For instance, it is best practice to seek instructions directly from the individual concerned, not indirectly via their partner.”

If practitioners suspect abuse, notes Parker, they should consider whether there is any conflict with them continuing to act for both parties and even for either party.

“If it is considered OK to continue acting, they should be seeking direct instructions. Ideally, this should be done by phone/video conference — as well as in writing — so the practitioner can be confident they are communicating with the party they suspect is being abused.”

He also recommends when documents are sent out to a client for electronic signing, the individual should be called to confirm that they have seen and approved the document. 

“[As] their partner could be accessing the computer/device and authorising documents without their knowledge or consent.”

Financial abuse checklist

• Look for irregular payments or transfers. 
• Watch for lack of transparency. 
• Watch for blurring of personal and business funds. 
• Look for financial control or isolation from financial information during family breakdowns, such as a divorce.
• Appointing directors/partners: Check for sudden, unexplained leadership changes that may indicate financial manipulation.
• Business partner disagreements: Look for financial mismanagement or misappropriation of funds in cases of business conflict.
• Formalise processes for financial transactions, payroll and business decisions.
• Conduct regular audits and financial reviews to uncover irregularities.
• Provide training and awareness for staff on recognising financial abuse.

If you or someone you know is experiencing financial abuse, support and resources are available at Are You Ok? , which has a 24-hour helpline: 0800 456 450. Take care and prioritise your well-being.