What Is Financial Abuse?

The risk of becoming a victim of financial abuse has increased due to the Covid-19 pandemic and the cost of living crisis, according to experts.?

Two thirds of domestic abuse survivors believe abusers are using the cost of living crisis as a tool for coercive control, according to a survey by Women's Aid.

Similarly, Hourglass – a charity that works to challenge and prevent the abuse of older people – saw a 73% rise in calls relating to financial abuse in 2022 compared to 2021.?

Financial abuse can happen to anyone of any age, but older people are particularly vulnerable, and the abuse often goes unreported.

What is financial abuse?

In a survey of 1,025 Which? members, 4% said they had been the victim of financial abuse, while 13% said they knew someone who had been.?

Financial abuse covers a broad spectrum – it could be a carer taking an extra ￡10 from their client's purse, or a husband controlling their wife's everyday spending.

It could also be that someone is building up debts in your name, forcing you to pay for their goods, accessing your financial accounts without your permission, or manipulating you into signing over property.?

Financial abuse is often part of wider economic abuse; it can mean controlling other resources such as housing, transport, employment and clothing.?

In 2021, the Domestic Abuse Act was updated to legally recognise economic abuse as a form of domestic abuse. Abusers can be romantic partners, family members, friends or carers.?

Power of attorney open to misuse

Lasting power of attorney (LPA) enables one person (the donor) to give another (the attorney) the power to make financial decisions on their behalf if they lose mental capacity.?

The LPA will only come into effect once the donor is deemed unable to make decisions for themselves.?

Financial abuse can occur when attorneys take advantage of the person they’re supposed to be protecting.

The Office of the Public Guardian (OPG) can help in these situations, but according to Sheree Green – director of Greenchurch Legal Services Ltd and former chair of the Law Society’s Mental Health and Disability committee – by the time the OPG is involved, it may be too late.?

‘By then, most of the money is gone, and often victims are living hand to mouth,’ she says, adding that because proceedings take so long, the main witness may lack the mental capacity to give coherent evidence.?

‘There is probably no paper trail, nothing in writing. It’s very difficult to look back and find evidence that establishes whether the person did or did not have capacity to give away money or assets at the time money or property changed hands.?

‘People don’t lose all of their decision-making powers at a point in time – they tend to decline over weeks or months.’

Another issue is often victims not wanting to take their nearest and dearest to court.?

‘It may be that the abuser is also the only child and the main beneficiary of the person’s will,’ says Green, ‘in which case, any assets you can recover will end up back in the abuser’s hands when the person dies.

Green believes there is a ‘tsunami of financial abuse waiting to be uncovered’ in the wake of the pandemic, when visits by social service and other professionals were suspended.?

According to the charity Surviving Economic Abuse, the average debt in victims’ names – resulting from an abuser’s control over their finances – has risen significantly in the past two years. It now stands at ￡20,000, compared to around ￡3,000 in 2020.?

Pressures caused by the rising cost of living are increasing the risk of abuse.?

‘Families are under greater financial pressures, people are struggling to make ends meet and if an opportunity presents itself to “borrow” from a vulnerable person, the temptation to follow through may be all the greater,’ says Green.?

Two-thirds of domestic-abuse survivors believe abusers are using the cost of living crisis as a tool for coercive control, including to justify further restricting their access to money, according to a survey in August by Women’s Aid.

THANKS TO Which.co.uk for this information

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