Banks and super funds urged to stop the ‘hidden epidemic’
Australians are facing a “hidden epidemic” of financial abuse, prompting calls for collaboration between banks and super funds to address the systemic issue.
A federal parliamentary inquiry into financial abuse in Australia’s financial services industry issued a report with 61 recommendations, revealing widespread financial abuse across the country.
Financial abuse involves one person exerting control over their partner or family member’s finances, posing a threat to their financial security.
The recommendations include measures such as ensuring customers are not experiencing financial abuse, enhancing reporting mechanisms between financial institutions and law enforcement, and providing better safeguards and support for victims.
In 2021/22, approximately 1.6 million women and 745,000 men experienced economic abuse from their partners, as per the Australian Bureau of Statistics, resulting in a cost of $5.7 billion to victims in 2023.
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Victims who managed their own super funds face significant disadvantages, especially in the superannuation death benefit system, the report highlights.
The report suggests amending superannuation laws to prevent offenders from receiving death benefits and conducting a review of the COVID-19 early super release scheme to uncover coerced withdrawals.
The Super Members Council praised the bipartisan effort to stop abusers from accessing their victims’ superannuation after death.
Chief Executive Misha Schubert stated, “Allowing perpetrators to receive their victims’ super death benefit is an extension of the abuse. The sector is united in advocating for reform and condemning all forms of abuse.”
Individuals with limited digital literacy are becoming vulnerable to financial abuse during the shift to electronic banking, necessitating reliance on others for banking services access.
The joint committee on corporations and financial services proposes outlawing abusive descriptions in electronic money transfers and permitting victim-survivors to conceal certain details from perpetrators in joint bank and insurance accounts.
Banks support recommendations to amend privacy laws to enable them to flag financial abuse, stated Australian Banking Association CEO Anna Bligh.
Bligh added, “The industry has made significant progress in preventing, identifying, and supporting customers impacted by financial abuse over the past decade.”
Committee Chair Senator Deborah O’Neill characterized the issue as a “systemic problem” exacerbated by legal loopholes, lack of awareness, and complicity within financial institutions.
“The recommendations in the report aim to establish a coordinated response from the government, financial institutions, and the legal system to address this hidden epidemic,” O’Neill said.
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