Banks urged to disarm tools of financial abuse

Banks must redesign products to better protect against their use as weapons for financial abuse or coercive control, a new report urges.

Report author and former Commonwealth Bank and Westpac executive Catherine Fitzpatrick said banks were well placed to protect customers against financial abuse. Picture: Britta Campion

Banks must redesign products to better protect against their use as weapons for financial abuse or coercive control, sending a “really clear message” to perpetrators.

That’s the view of former bank executive Catherine Fitzpatrick who authored the report Designed to Disrupt, which urges change in the design of banking products to help prevent or minimise harm.

“A bank account should be no place for abuse,” she said. The report shows the ways common banking products such as credit cards and mortgages are being used to conduct financial abuse, and how recommended changes to terms and conditions may curb that behaviour.

The report was undertaken for the Centre for Women’s Economic Safety and calls for all 97 Australian banks to heed its findings.

“Don’t wait until after the abuse has happened. Make the change to make it much harder and to make it really clear to perpetrators you’re not allowed to do this,” Ms Fitzpatrick said. She also noted talks were occurring with regulators, banks and consumer groups around the report’s findings, and she planned to specifically raise with the Australian Securities and Investments Commission how it may view the recommendations in light of its product design and distribution powers.

“The design and distribution obligation talks about product suitability and it’s also got a requirement to consider customer vulnerability, what it doesn’t say is think about how products might be misused to inflict harm,” Ms Fitzpatrick said.

The report included anonymous comments from victims of financial abuse, including several where one partner stopped paying their share of a mortgage. Another said her partner maxed out their credit cards, leaving the bank to pursue her to repay his debts.

The report drew on data showing 13,000 customers contacted one bank’s specialist teams over a 12-month period because they were experiencing domestic and family violence. For credit cards, the report recommended measures such as banks ensuring each cardholder was liable for spending on their card, applying a chargeback methodology to disputed transactions and not allowing joint or secondary card holders.

For mortgages, one of the report’s design changes suggested at loan origination, notifying customers of mortgage liability and options should separation occur, and a choice about the type of contract including 50:50 liability or another percentage.

Centre for Women’s Economic Safety chief Rebecca Glenn said banks had an important role to play given an earlier survey found most victims would turn to a bank for support, over a domestic violence service.

The major banks have taken steps to disrupt abusive or violent communications by implementing blocks for payment or transfer messages of that kind. Some banks are also sending warning letters, with the report finding that at two banks warning perpetrators their behaviour would not be tolerated saw about 90 per cent of customers report a discontinuation of abuse.

Social Services Minister Amanda Rishworth urged banks to assess improvements to products and services to help meet the goal of ending gender-based violence.

“Women should not have to choose between their financial security or their safety,” she said.