Vulnerable Customers and Economic Abuse

I have recently been undertaking research for good practices that financial firms could take on board to help support their vulnerable client policies.

I think one area that is not highlighted enough is economic abuse. This topic resonates with me on two counts; firstly, due to personal experience as a victim in my very early married life, although I didn’t know it at the time and secondly, as a mortgage adviser in the 1990s, where I came across several situations that, having now read these articles, I can recognise there were telltale signs of such abuse.  

I therefore felt that it might be useful to write a small piece on what ‘economic abuse’ is, how to recognise it, and also what you can do to support any of your clients who may be seen as victims of it. One thing I will say is that it is not your job to be a trained counsellor, nor is it your job to save your client from any such abuse, but it is your role to advise and support your client - and that might just mean the ability to listen, empathise and provide relevant contacts where your client could get help. 
 

What is Economic Abuse?

According to the registered charity Surviving Economic Abuse, the definition of economic abuse is where a perpetrator restricts, exploits or sabotages their partners access to money and other resources such as food, clothing, travel or a place to live. It is designed to limit someone’s freedom.  It creates economic instability and can make one partner dependent on the other which can prevent victims from leaving and rebuilding their lives.

According to the charity, one in six UK adults has experienced economic abuse by a current or former partner and over a third didn’t tell anyone about it.
 

Understanding Economic Abuse

One way in which perpetrators control their partners or ex-partners is through joint financial products and these can be things, such as a mortgage. Some examples of the way that this can manifest itself are below:
 

• Forging signatures on documents and fraudulently applying to re-mortgage the property.  This would include capital raising to release equity to potentially fund their own projects and lifestyle
• Forcing the partner under duress to sign documents to borrow further money
• The abuser would stop paying their share of the mortgage and bills
• Refuse to move out of the home
• Withholding their consent to re-negotiate their mortgage product and interest rate, this includes any consent to sell, or re-mortgage the property
• Abscond or leave the UK leaving the partner to deal with the debts and repayments
• Encouraging the partner to rent out a buy to let but all the paperwork is put into the perpetrators name so that the partner has no control over decisions

According to the charity Surviving Economic Abuse, abusers can also use mortgages and borrowing as a tactic, even if they are not in joint names, by:
 

• Forcing their partner under duress to apply for a mortgage or add them to the mortgage
• Fraudulently apply to be added to the existing mortgage or taking out a new mortgage
• Use spousal rights to register their name on the property deeds.

Long term joint financial products like mortgages means that the abuse can continue long after the relationship has ended.  

Those clients that experience economic abuse via a mortgage product end up usually with significant debts. For example, borrowing to pay bills via credit cards and loans, and also family members in order to maintain payments and prevent arrears - often not explaining the real reason for the borrowing to the Lender or family member. Repossession proceedings can be issued within 3 months of the mortgage being in arrears but getting legal help to make the perpetrator accountable for their share can in most instances take a lot longer, and by that time the property may well be in possession. 
 

Signs to look for from a Mortgage adviser point of view

There are some key signs to look out for, but remember that you are not there to solve everything. Although it might be daunting to start talking to the client about such things, by simply doing that you are playing a crucial role to help them achieve economic safety.

Surviving Economic Abuse suggest that you should look out for clients who:
 

• Remain silent whilst the other party does all the talking
• Instruct you to speak to their partner 
• Seem to be taking instructions from their partner
• Appear withdrawn, fearful, scared or distressed
• Do not understand or are not aware of a mortgage in their name
• Tell you things like their mail is no longer being delivered to their home
• Ask for something that will clearly not be in their best interest like adding a partner to the mortgage
• Ask for equity or any loan to be paid into their sole account rather than a joint one
• Tell you that their partner is not paying their share of the mortgage 
• Look out for 3rd parties providing forms that have been signed by the borrower but everything else is completed in different handwriting

How to respond

It will be very daunting if you have not come across someone who is being economically abused by a partner or close relation, let alone someone who opens up and tells you that something is wrong.  

Quite often, economic abuse and controlling behaviour go hand in hand with physical violence or threats of physical violence. The first thing to do is to respond with empathy and encourage the client to open up and tell you their story.  

With the client’s consent, you can take notes and confirm that this will be held securely on their file, but the client will always have the option to ask for it to be removed or updated. This will allow other staff to fully understand the client’s circumstances without asking further questions. Try not to ask the client to repeat themselves. You can refer the client to specialist services including external sources such as the Charity Surviving Economic Abuse or Refuge. Independent legal advice could be considered, but also you could consider asking if the client has spoken to a trusted member of their family about their situation. If the client is in imminent danger then you can ask the client whether they would like you to involve any authorities, like the Police. 

There are a number of other things and actions you can help the client take that may help with any missed payments or arrears, such as contacting the client’s Lender and asking the client if they will give you their permission to share their problem with the Lender so that they can consider a payment holiday or forbearance options.  

This is just a snapshot of understanding economic abuse but there are plenty more resources that can be found via the Charity Surviving Economic Abuse.

A good starting point might be to watch the BBC3 programme, “Is this Coercive Control?”, where journalist Ellie Flynn brings 20 people together aged between 18-25 years old from across the UK to explore whether they knew what coercive control actually was. It’s been illegal since 2015, but would this group be able to spot it if they saw it happening? The programme is available via BBC iPlayer here.

You may wish to consider adding some of this training to your vulnerable client policy, you’re your training & competence plans. You could also add the charities to your list of help for clients who may be in need. 

Please get in touch with Paradigm, using the details below, if you would like to understand more on how we can help you develop your policies and training in these delicate areas.
 

• Phone: 0330 053 6061
• [email protected]
• Request a call back