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Financial abuse: how to spot the signs, and where to turn for support
Pressures caused by the cost of living crisis are increasing the risk of 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.
Here, Which? explains how to spot the signs of financial abuse, and where to go for support if you or someone you know is affected.
What is financial abuse?
In our survey of 1,025 Which? members, 4% told us 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.
Older people are vulnerable to financial abuse
Hourglass, which offers a free support service for older people in vulnerable situations, saw a huge rise in calls last year.
It took 2,909 calls relating to financial abuse in 2022, compared to 1,676 in 2021.
Veronica Gray, deputy chief executive of the charity says: ‘People over the age of 50 hold 70% of the wealth in the UK. This in itself makes them a target. Wealth does not equal protection.
'As we age, we may have other needs or issues to deal with, including bereavement, loneliness, isolation, disability – all of which can contribute to dependency on others for help, care and support.’
In some cases, a legal arrangement designed to protect vulnerable people’s finances can be exploited by their abusers.
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.’
- Find out more: what is Power of Attorney?
The cost of living crisis and financial abuse
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.
- Find out more: cost of living advice and support
What financial institutions are doing to combat financial abuse
Veronica Gray, from Hourglass, believes that financial institutions have a huge responsibility to combat financial abuse.
A survey by the charity and Hodge Bank in October 2021 found that more than nine in 10 people aged 45 to 70 think that financial service providers are not doing enough to protect older people from financial abuse.
This is despite the launch of a voluntary code of practice in 2018 aimed at supporting victims, which some of the biggest high street banks have signed up to.
The code – established by the banking industry body UK Finance – requires staff to have training to spot and sensitively deal with financial abuse.
Participating banks should also have a ‘vulnerable customer’ department who you can speak to.
Some banks offer more tailored help, including HSBC, which allows victims to request a generic sort code to stop a perpetrator knowing their whereabouts, and TSB, which launched an Emergency Flee Fund in December to help people who are fleeing abusive relationships.
As of January, the UK Finance code has been expanded to include guidance on how banks can deal with debt separation.
UK Finance told Which?: ‘Seeking help is the first step in victims regaining control of their money and their independence, and it is imperative that the individual is treated in a sensitive, compassionate manner.
‘We would always encourage customers to speak to their bank as the first step to getting financial help and support.’
'I was made to account for every penny'
Natasha Saunders says the abuse she suffered by her ex-husband more than seven years ago still affects her.
‘It was little things at first: it was ‘easier’ to have all the money in my ex-husband’s account; when we opened a joint account it made sense to just let him carry the cards. I didn’t question it. But later on, I was made to account for every penny.
‘I was worried about asking for sanitary products and clothes for the children, for fear of his reaction.
‘After I finally escaped his clutches, he continued his reign of abuse. By having my name on the utility bills, he simply stopped paying – and those debts still hang over my credit rating.
‘Financial abuse can be subtle – especially when you are told over and over that you can’t be trusted with money, or that you are stupid.
‘The scars still show when I justify a purchase to my supportive second husband, who gently reassures me that it is our money, and that I do not have to explain myself any more.'
'I didn't really notice the signs'
When Sarah Coles met the man who would go on to be her abuser, there was no sign of what was to come. He was outgoing, optimistic, and had a reputation for his generosity to strangers, but he became increasingly controlling.
‘I didn’t really notice the early signs. They felt very much like suggestions from a concerned partner.
‘When I went to meet a friend in a local shopping mall, for example, he would remind me that I didn’t need anything, so I shouldn’t buy anything.
‘Over time, these comments became more prescriptive, so I gradually had less choice over how I spent my money.
‘Before long, I was covering the mortgage and the bills, plus the basic essentials, and if I bought anything else he would punish me emotionally. Meanwhile, he spent his money on designer clothes and going to expensive bars.
‘It wasn’t just spending. He gave up work without telling me – a week before our second child was born.
‘I knew I was unhappy, but didn’t recognise I was a victim of financial abuse until I told a friend. When I ran through all the rules controlling my life, I finally realised how far things had gone.
‘I was very lucky to be able to leave him, but it wasn’t straightforward, and he did what he could to take revenge financially.
‘When I was trying to arrange for him to see the children, he spent as long as possible negotiating with lawyers, before changing his mind at the last minute. That cost me more than £20,000 – and we still never reached a formal arrangement.’
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Sarah Coles, who is also a financial adviser at Hargreaves Lansdown, says it's important to look out for changes in people you know, and to ask them about it.
For example, have they started spending less despite no change in circumstances? Do they keep ‘forgetting’ their wallet? Or are they refusing invitations that involve spending money?
‘They may be aware they’re a victim and not feel they can talk about it,’ Coles says. ‘Make it clear you’re available for support without judgement – you could be the lifeline they need.’
If you’re concerned about an older person experiencing financial abuse, or are in this situation yourself, you can contact Hourglass on its 24/7 helpline – 0808 808 8141 – or visit wearehourglass.org. Alternatively, contact your local adult social services.
If you have concerns about a registered lasting power of attorney, contact the OPG by emailing opg.safeguardingunit@publicguardian.gov.uk, or calling 0115 934 2777.
If you’re experiencing financial abuse by a partner or ex-partner, you can contact Surviving Economic Abuse on 0808 196 8845 for specialist help and support. You can also visit its survivor forum at survivingeconomicabuse.org
- Find out more: free debt advice contacts
