Why teaching our girls to be financially autonomous is urgent - economic abuse in Australia

Up until the 2000s, economic abuse wasn't really something that was talked about as a form of abuse. Financial abuse has been included in Victorian Family Violence legislation since 2008, and is classified as a form of domestic violence, but states vary in their legislation.

Financial abuse is certainly not limited only to women, but due to the persistence of gender norms and gender imbalances in Australia, women are still significantly worse off financially across a lifetime. 

Two distinct areas have emerged from investigations into financial abuse: elder financial abuse and domestic financial abuse, though they are in fact often the same thing, since domestic violence occurs within families. 

Elder financial abuse is the manipulation of an older person's finances for the gain of someone else, perhaps a child, but also in terms of consumer fraud directed at the elderly. It is sometimes much harder to determine.  

Domestic financial abuse is behaviour within an intimate relationship that constitutes emotional abuse, or in legal umbrella terms, domestic violence. 

What is financial abuse?

To understand where we place financial abuse in a social context, we must first understand our evolving definition of domestic violence. 

There is no accepted definition in Australia or even internationally regarding what constitutes family or domestic violence, with our views on what is and isn't incorporated into this definition varying depending on our experiences, societal norms, and gender. 

Elders of both genders are vulnerable, but not equally so. Research has repeatedly revealed that men are more confident with their (typically more abundant) finances, therefore in older age, men more often have systems in place to take care of their own economic welfare. Women are more often considerably less well-informed, have less savings in old age, and depend more heavily on family for financial decisions and support. 

The Australian Bureau of Statistics (ABS) uses the definition of partner violence as those actions that are offences under State and Territory criminal law - attempts or threats of violence - but the Family Law Act 1975 recognises many more behaviours under this umbrella, including coercive and controlling behaviour. This is where economic abuse fits in. 

Since 2012, the ABS has expanded their definition to include emotional abuse after updates to the Family Law Act, but it is believed that ABS data under-reports true domestic violence rates in Australia because of the narrow definition, but also due to the stigma, shame, and economic or other forms of dependence by victims impacting reporting. 

As a community, our views on domestic violence have a direct impact on reporting, which is why understanding financial abuse in a clearer way means we can learn to identify it more quickly, instead of discounting it as a more benign manipulation method that we just have to tolerate, like door slamming or the cold shoulder. 

A point of contention - the gender split in perceptions of economic abuse

A 2012 survey found that actually defining what we think are abusive behaviours varies, and men and women had the hardest time agreeing on whether limiting or controlling your partner's finances or how they spend their money was an act of domestic violence, as the law defines this term. Ninety-two per cent of women believe this is a form of abuse, while only 84 per cent of the male respondents felt the same. The other questions maintained a divide between genders, but none as large as this question. 

The survey isn't without its biases and limitations - it was conducted on a Relationships Australia website as an online survey, with over 2,000 respondents. Three-quarters of these respondents were women - the primary users of Relationships Australia services (counselling, family dispute resolution, and domestic violence services), who are far more likely than the general public to have been a victim of domestic violence, as indicated by their mere presence on that resource website. 

What this survey offers us is not statistically useful data per se, but a glimpse into how attitudes vary in a small subset of the population who are directly affected by domestic violence. 

The Australian Law Reform report offers some guidelines for interpretation of family violence legislation. 

Only Victoria, South Australia, Tasmania and the Northern Territory include 'economic abuse' in their definition of family violence. Regardless of its specific inclusion, economic abuse is considered a form of domestic violence in Australia. 

Though the precise formulations vary, examples of economic abuse might include:

  1. unreasonable controlling behaviour, without consent, that denies a person their financial autonomy;
  2. withholding financial support that is reasonably necessary for the maintenance of a partner;
  3. coercing a partner to relinquish control of assets;
  4. unreasonably preventing a person from participating in decisions regarding household spending or joint property;
  5. coercion to claim social security payments; or
  6. preventing a partner from getting or keeping a job

Some provisions require intention to be taken into consideration. In Tasmania, economic abuse is a criminal offence, but the law requires the person committing the abuse to be intending to unreasonably control or intimidate his or her spouse or cause mental harm when committing certain acts of economic abuse. 

Elder financial abuse and fraud

Elder financial abuse does not fit quite so neatly into domestic violence, with vulnerable elderly more often falling victim to scams, fraud, and theft than other types of crimes. 

The impacts of this type of financial abuse of elders can be devastating, because there is very little to no opportunity for economic recovery after a big blow. There is therefore a great deal more fear of economic abuse in this population than in other populations. The emotional, physical and mental consequences of fraud in elders are far more profound than in younger populations. 

Domestic elder financial abuse is a problem almost exclusively found in older women, committed by an adult child, particularly following the death of a partner. This is still a form of domestic or family violence, since it occurs within the family unit. The only real difference between financial abuse and elder consumer fraud is whether the person committing financial abuse knows their victim or not. Consumer fraud is typically a stranger presenting themselves as a person in a position of power or knowledge, taking advantage of a trusting person. 

Older people can also fall victim to retirement village contractual financial abuse and power of attorney decision-making abuse.

Financial abuse of elders falls into several areas:

  1. Crimes, illegal acts
  2. Unfortunate acts (but not illegal acts)
  3. Acts that occurred due to an elder's diminished capacity to understand
  4. Acts that are not deliberate or intentionally malicious, but are detrimental to the older person
  5. And a simple failure to act in a timely manner to protect an elder's interests

Why elder financial abuse is a tricky area to define

It can be very difficult to determine if financial abuse has actually occurred. Family norms with money, unwise financial decisions, and the perspective of the person involved must be taken into account.

'Family money', normal transactions, and asset management within a family are unique and each family has their own way of going about these matters. What could be considered abuse by some, is considered acceptable and normal for others. 

The main test is: is this conduct in the best interests of the elderly person? And secondarily, has the elder given consent to the transaction taking place? There are no specific laws in Australia for elder financial abuse, so this usually falls under criminal law. 

Australian women are wide open for financial abuse

A recent CoreData survey asked 800 women nationally about their financial situation to evaluate their risk of becoming a victim of financial abuse. 

Key findings from the study include:

  • About 60 per cent of women in a relationship do not hold separate assets from their partner in their own name.
  • Seventy per cent of those in a relationship feel at least somewhat reliant on their partner for financial support.
  • Those with their own: savings account (39 per cent), transaction account (34 per cent), credit card (36 per cent), shares or other investments (18 per cent), residential property (9 per cent), or an investment property (5 per cent). 
  • Eighty-six per cent said they worried to some extent about money and the future, with a shocking 53 per cent saying they had no financial plan at all. 
  • About 10 per cent said they have very strong financial knowledge. 
  • Twenty-nine per cent save nothing each month. 
  • Over half of those in relationships said that a divorce, separation, or becoming widowed would have a negative impact on their sense of financial security, if it happened suddenly. 
  • Over 30 per cent said they have suffered emotional abuse at the hands of a partner at some stage.
  • About 14 per cent said they have felt that a partner or husband has had access to their personal finances to control them or the relationship at some stage. 

How financial advisers and the risk industry can help

Women are being left open to economic abuse because they do not make/can not make/don't know how to make more concerted efforts to become independently financially secure. 

This is a problem that not only women can solve - teaching our girls that being independently financially secure is expected of them would be a good start, the same way we teach boys this, directly or indirectly. 

Financial advisers are in a unique position to develop services that draw in women, women who wouldn't normally get financial advice necessarily, and educate them on what a real, autonomous financial future looks like independent of their marital status. 

Financial literacy in Australia is slowly improving, as are the gender imbalances that cause women to be financially worse off throughout their lives, but in particular at retirement. The data on financial abuse in Australia is glaringly obvious in its message: we must teach our girls to value being financially autonomous.