Financial abuse is insidious and rampant - take steps to protect yourself

Financial abuse is a powerful and dangerous form of intimidation which is a lot more common is Australia than you think.

Wednesday was World Elder Abuse Awareness Day with older Australians being encouraged to stay alert for the warning signs of financial abuse and scams, coinciding with new CommBank research which found this age group may be at higher risk.

According to a CommBank survey of almost 2,000 Australians aged 65+, more than 1 in 4 (28 per cent) have experienced financial abuse or know someone who has. Of those who are experiencing financial abuse, more than half (52 per cent) believe they can deal with the behaviours of financial abuse themselves.

Financial abuse is a powerful and dangerous form of intimidation which is a lot more common is Australia than you think.

What makes financial abuse even more insidious is that that the abuser often justifies their actions as caring. But the bottom line is that financial abuse can leave you extraordinarily exposed.

This sort of abuse often takes the form of a partner in a relationship, or a parent over a child, or an adult child over an elderly parent where the abuser completely controls the finances of the other person and refuses to share any of that responsibility or information.

Signs of financial abuse

Financial abuse could be:

having sole access to bank and online accounts.
controlling PIN codes.
taking out joint loans without a partner’s consent.
restricting access to insurance, superannuation and estate planning documents.
limiting access to cash and credit cards.
making investment decisions without consultation.
asking you to sign financial documents without explaining what they are.

We’re not talking about a situation where a couple has agreed one partner takes primary responsibility for running the finances but is always happy to keep the other partner informed. Or an adult child willingly and transparently helping a parent.

Secrets and control

A financial abuser is a partner who has insisted on controlling the finances, is secretive about what they’re doing and will not share information.

To test which sort of partner you have, simply ask for them to explain the state of your finances, provide access to all accounts and let you know where insurance and investment documents are kept.

If they refuse, you need to worry.

If they say, “you don’t need to worry about, I have it all under control”, you should worry.

Explain that you’re concerned if they drop dead you’d have no idea where anything was and that is just too risky and you’re feeling vulnerable.

If they refuse after that, you’re in real strife and must do something about it. Your partner either has something to hide or they have such a controlling personality it will put you at risk in the future.

What if your partner does die… or leaves you.

Sexually Transmitted Debt

Sexually Transmitted Debt is another of the many risks. It’s where one partner in a relationship is lumbered with the debts of the other. You’d be amazed just how common this problem is.

One partner will rack up debts on the joint credit card, refuse to pay or skip out and the other partner is left with the responsibility of paying the whole debt. Joint cards or loans don’t mean you’re only responsible for your half. It means both people are responsible for the whole debt if the other can’t pay.

Take steps to protect yourself from financial abuse

Here are some steps to protect yourself from financial abuse:

Base financial decisions on economics, not emotions. If you trust each other then there is no problem with formalising that trust by keeping each other informed about financial decisions.
Don’t dismiss it, read it. When you have to sign papers it is better to be one day late than to lose everything in five years’ time, just because you were too busy to read the small print.
Be careful of going guarantor. If the bank doesn’t have confidence in the principal applicant, why should you? Remember, when you sign as guarantor, you are indicating you are prepared to take over the whole debt if the borrower defaults.
Be involved. Know where the money is coming from and where it is going.
Set a limit on joint accounts. If you have a joint account with your spouse, make sure the bank does not allow transactions above a certain amount to be paid unless there is joint agreement.
Look carefully at how you buy assets. Single names, joint names, their name, your name? It could all be extremely relevant for both tax purposes and if the relationship splits.
Check the books. If you are a director of a family company you have a right to see the books. Insist on the accountant showing them to you. If stopped from doing so, you can take action under the Companies Code.
Agree on a financial plan. This way both partners have common goals and know where they are heading.