Behind closed doors: Economic abuse

A warm welcome to today's webinar, Behind closed doors. I'm Shelley Read, and today I'm joined by Fiona Hanrahan. We are both Senior Technical Managers at Royal London. So, in the financial service sector, economic abuse is often invisible until you look closely at the protection and pension outcomes it leaves behind.

So today, Fiona and I want to explore how control over money, insurance, savings, and retirement provision can become a mechanism of control and coercion, and also why the financial services sector has a really critical role in recognising and responding to it. As professionals working in the protection and pensions world, we're in a position not only to identify risk, but to help restore financial independence, autonomy, dignity, and future security.

The questions we ask, the warning signs we recognise, and the safeguards we implement can make a real meaningful difference. So, thank you for joining us and taking the time to sign up to our May webinar. It's great to have so many of you with us today. I would like to say, however, that this is a very sensitive subject.

We're going to share some real-life victim experiences, so if this is not for you today, we completely understand. Your wellbeing is really important to us. So, before we begin, there will be a short survey at the end of the webinar, so please take time to complete it for us, as your feedback is so important. And finally, to gain your CPD hours, we will send you an email within 24 hours, and remember, this is separate to the survey. So, let's get started.

Now, it wouldn't be a protection learning event without some objectives, and here today are ours. So after this session, we hope you'll be able to understand more about the growing issue of economic abuse in the UK, identify how it affects those victims with a mortgage, a pension, or a protection plan, and recognise the signs to look out for, and importantly, what to do if you suspect economic abuse.

So, let's get started. We're very proud to continue to work closely with Surviving Economic Abuse charity. And much of the research and lived in experiences that you're going to see and hear today have been supplied by Surviving Economic Abuse charity. So, let's now have a look at some of their findings before we explore more about how this control affects protection and pensions.

So, this is research from Surviving Economic Abuse, and they found that more women actually disclose economic abuse to financial service providers at 23%, than to the police at just 13%. Now you can see here I have said more women. Today we are going to talk more about women, but this is by no means a type of control that only affects women. Men can be affected too, but it is much more prevalent where the victims are female.

And also, one in five women in the UK have experienced some level of economic abuse in the past year. That's quite a staggering figure, isn't it? About 5.5 million women. And one in three victim survivors actually had to give up their home due to economic abuse, and 78% of survivors have said that joint mortgage abuse kept them from leaving their home. And I'll look a little bit in more detail at mortgage abuse in just a moment.

So economic abuse and financial abuse, you maybe have heard both of these phrases. But what's the difference and is there a difference? There definitely is. Let's just generally look at economic abuse. It is a legally recognised form of domestic abuse, and basically, it's where one person controls or restricts access to money, but also resources and economic independence.

So, it can include controlling finances, of course, but also employment, transport, utilities, food and housing. Sadly, it often occurs alongside other forms of abuse such as emotional, psychological, physical, and sexual abuse, and it diminishes the victim's capacity to support themselves, forcing them to depend even more on the abuser financially.

So, to differentiate between financial abuse and economic abuse, the probably the easiest way is just to give you an example. So, this is financial abuse, and this is a quote from a victim survivor. This lady said that her partner took every penny of her salary. If she asked for money for lunch at work, he would give her exactly £3 for a Tesco meal deal. And obviously, work colleagues asked her for lunch, and she'd have to make excuses. So, the isolation increased, and she never saw any mail or bills in their home. So, you can see that's what we would call financial abuse because it's generally around controlling money and finance.

Now, this is more economic abuse. This lady told us that, "He did deliberate damage. Within minutes of my graduation ceremony, he called me to say he had crashed my new car and was angry that my employer, at that time, sponsored my education, and gave her a car allowance. I was instantly reduced to tears in front of my classmates, friends and family and had to pay £5,000 for the repairs to my car." So, you can see there that just isn't just finances, it's also maybe access to transport and also education and employment.

Now, there are some groups who are at an increased risk of being a victim of economic abuse, and we'll just have a look at those now. So groups at increased risk, it can mean increased dependency that is really exploited. And as I said, some groups can be socially isolated, meaning that they have reduced access to support. So, some groups that may be at a higher risk of being a victim of economic abuse are, first of all disabled women. Now they might be dependent on a partner or a carer for daily needs. This sometimes will make it easier for the abuser and more restrictive for the victim. But here we can see that abusers may control benefits, medication, medical aids, or even transport.

Now, women of colour are also at an increased risk. Here we see cultural stigma and community pressure might make it difficult to even report this abuse. It could even be that within this group there is sadly a distrust of authorities, therefore, the abuse doesn't go reported. Immigration status can often be used as a tool of control with threats of deportation or withholding documents. And maybe here even language barriers can make it more difficult to seek help.

And the LGBTQ group, similar tactics here as in the threat of outing them to family, work colleagues or management. Again, it's that fear of rejection. And here again, we see control and access to money, to work, education, and often we see creating debt.

Now, women on a low income, often we see in this group young moms that we know are three times more likely to experience this type of control. Maybe they have less ability to resist or escape, and maybe again, they have limited access to employment or housing, and this will increase their vulnerability, but it isn't just young moms.

Older women can definitely experience this type of control. Maybe they're financially dependent due to working part-time or maybe even retirement. And I think it's important to note here that it's not just a spouse or partner who can be the abuser. People can be exploited by grown-up children or even a carer. And in this particular group of women, something that we need to be really mindful of is coercion into equity release.

Now, the largest group of women where economic abuse is on the increase is sadly younger women between the age of 18 to 24. Now, this might be because these women are in early relationships. They might be leaving home for the first time for a job or to study, so don't have that network of friends and maybe even their mum to hand. We see here that quite often a phrase that's used is, "This is what an adult relationship looks like, where one person takes control of the finances." And that can often be in the case, but definitely not in a malicious or controlling way.

And again, in this group, we see control of access to employment even further education, and maybe alongside controlling spending, coercion into taking out more debt. And I think it's important to note that, domestic abuse doesn't discriminate. It certainly can affect anyone at all.

So, what I'd like to do now is to ask you to watch a short video. It was commissioned by Surviving Economic Abuse charity. And although this is an actress, it is a real victim survivor experience, and it shows how this type of control can happen very slowly, bit by bit, until the victim is completely isolated and dependent, and just shows that it can happen to anyone.

But again, I just wanted to say, if you don't want to watch this video because it is quite powerful maybe put the kettle on, make a cup of tea, and come back to us in about four minutes' time. So, I'm going to play this video now.

VIDEO STARTS

It's a gradual process, little by little, bit by bit. It's a cliche, I know, but he was the love of my life. We got married, new house in the country. I was pregnant. Life was good. He thought I should leave my job. I was a bit sad, but the guys gave me a great sendoff. Seven pounds, six ounces, a healthy baby boy.

We called him Archie. And he was right. I could now stay home and look after our son. It's expensive having a baby. I was exhausted and lonely, so he offers to help by managing all the bills. Funny how you don't even really notice it at first. Then he suggested that I put all of my life savings into our joint account.

Now we can pay off the mortgage quicker. He keeps telling me that it's not his money or my money, but it's our money. Little by little. Then he says that we need to be more careful with our spending. He puts me on a strict budget. I get £30 a week to pay for everything. I can't afford the petrol to take Archie to school.

He just says that the walk is good for us. Bit by bit. He asks to see receipts for everything. He questions me on, ‘Where I've been’, ‘who I've met’, ‘what I've spent’. He took all my bank cards, and when I tried to access our bank account, I discover that he's changed all the passwords. I tried to discuss it with him, but he just gets angry. He screams at me, slams drawers, tells me I'm mad. It's driving me nuts.

He blames me. He says it's my fault, that I'm forgetful, that I'm stupid. I literally have to beg him for money, for food, petrol, everything. Sometimes I go hungry just so I don't have to ask. I'm scared. I've got no one to talk to. He hasn't actually hit me, so no one would believe me. I don't know what to do. I just want to get Archie and go, but I can't. I have no money and no way out. It's a gradual process.

VIDEO ENDS

Gosh, that's really powerful, isn't it? I think we probably all need to take just a second or two. Let's have a look now though at how economic abuse manifests itself in the mortgage world. Victim Survivors that surviving economic abuse charity spoke to shared that perpetrators are really using joint mortgages as a form of economic abuse, often alongside other forms of economic control.

It includes perpetrators using behaviours such as exploiting the victim survivor's joint mortgage liability by forcing them to pay all or more than their agreed share of the mortgage, even when they might have been forced to flee the property. And this also includes things like accruing debts against the property for which the victim survivor is jointly liable or even stealing their money that is normally used to pay that mortgage.

So, we can see coercion in taking out or borrowing more on a mortgage. We also see sabotaging the victim survivor's ability to make those monthly mortgage repayments by refusing to maybe contribute to other costs, maybe such as child maintenance. And we also can see here that they can prevent repossession or sale of the property, trapping survivors to that joint mortgage.

So, for example, perpetrators might halt repossession proceedings by making just small token payments. They might stop a sale by disputing or disrupting house viewings, or they might even damage relationships with the estate agent. And also restricting the victim survivor's ability to make decisions regarding their mortgage, which are in their best financial interest, as well as controlling the income they intend to use to pay that mortgage. So we can see here that the, you know, the life-threatening impact of this form of abuse is really quite outstanding.

Over three quarters, 78%, of women who experienced joint mortgage-based abuse said that the perpetrator's joint mortgage abuse prevented them from leaving what was an unsafe, dangerous living arrangement with their current or previous partner. And victim-survivors had shared desperate circumstances of being denied access to life-saving refuge.

Just because they owned their own home meant that they couldn't access the housing benefit required to cover the rent while they remained contractually responsible for those mortgage payments on the unsafe home that they had to flee. And while some victim-survivors have been forced into immediate and maybe long-term homelessness to escape that abuser, others shared that their only real option was return to that abuser where they faced the risk of further harm and sadly even facing the risk of losing their life.

But I think whether victim-survivors are forced to flee or to remain with or return to the abuser, quite often they have to cut back on essentials for themselves and their children to try and keep a roof over their head and maintain that mortgage payments. And as we saw during the cost-of-living crisis, living costs and mortgage interest rates soared over the last few years.

Victim-survivors have increasingly struggled to make ends meet, and the victim-survivors that Surviving Economic Abuse charity interviewed, they described real dire circumstances of needing to rely on food banks to feed their families and to turn the heating off in the winter so they could keep up with those monthly mortgage payments.

But despite making these profound sacrifices, the Surviving Economic Abuse report detailed accounts of victim-survivors who had their lives destroyed by the perpetrator's joint mortgage abuse. They were left with mountains of mortgage arrears, destroyed credit ratings, often homelessness, and a lifetime or many years of housing and economic insecurity.

So, it's no wonder, is it? There's a staggering 89% of women who experienced joint mortgage-based abuse disclosed real negative mental health impacts because of this abuse, such as anxiety, depression, and even, sadly, suicidal thoughts. So, you can see that perpetrators deny access, they use home as a threat or leverage which is really sad because all of us like to think that our homes are a real safe place.

Let's have a look now how protection plans manifest themselves in economic abuse. So economic abuse in the life assurance and protection space can present in subtle administrative and highly controlling ways. It's often overlooked because the protection products themselves quite often appear routine, but the underlying behaviour really reflects coercive control.

So often policies are controlled by one partner who retains exclusive control over all the life insurance, critical illness, or income protection policies. Coercing someone into taking out or altering a plan, but refusing access to documents, online accounts or policy information.

We often can see that perpetrators cancel or reduce cover without consent. An abusive partner might deliberately, for example, cancel a policy, stop premium payments, reduce benefits, or allow cover to lapse, and this creates insecurity and dependency. And withholding protection as leverage. So, statements such as, ‘You don't need your own policy’, or ‘I decide what we can afford’, or ‘If you leave, I'll cancel everything’, can be indicators of coercive financial control in this area.

And policies can be used to create dependence. The victim might be prevented from working, then kept financially vulnerable by having no independent protection, savings or, as we'll see in a moment when Fiona chats to us, pension provision. But concealment of policies or concealment of beneficiaries - we see here that someone may hide existing life cover, change beneficiaries without discussion, or fail to even disclose policies during separation or divorce.

And again, we might see pressure regarding trust or nomination of beneficiaries. An individual might be coerced into naming certain beneficiaries or signing trust documentation that they may not fully understand. And obviously, control of claims proceeds is important. So following illness or bereavement, an abusive individual might take control of payouts, intercept communications, or pressure someone into handing over the funds.

And insurance can be linked to debt and manipulation. A victim might be pressured into taking out policies linked to a mortgage or business liabilities that are both primarily planning to benefit the perpetrator. And interference with underwriting disclosures. We see here that maybe one partner may answer all of the application questions on behalf of the other, or monitor communications with an adviser, or fail to present honest disclosure.

And within financial services, some warning signs that we may ask you to look out for are things like one individual dominating all the conversations, reluctance to allow separate contact with the other party, maybe unexplained policy lapses. But definitely repeated changes to beneficiaries might be a red flag. Or request to redirect correspondence. And you might even detect visible anxiety when financial matters are disclosed.

The other thing that's important in this world of protection is how we split plans when someone divorces or goes their separate ways or has to escape an abusive relationship.

Legacy plans I can't deny, are quite a challenge on the whole to split if they haven't been set up correctly. And one of the things I wanted to talk to you about today is to consider the structure of a plan and how we might set up a plan. And what I'm talking about here really is single versus joint policies and plans.

So, let's have a look at the two options. On the left-hand side, you can see where we've created two single life or earlier critical illness policies, plans. But more importantly, they're not just singularly life cover plans, they are individually owned. So again, many of you will be aware of the benefits, but let's just run through quickly.

If a claim is made, the other plan remains in force. That's really important, particularly if the other person has experienced some health issues. If there's a breakdown in relationship, it means each party can take their plan with them. Only the policyholder can cancel, amend or change their plan.

And multi-cover plans could offer a mix of individually owned and also jointly owned covers. So, it may well be a mortgage protection plan could be set up on a jointly owned basis because obviously it's important to know with that debt that the other person's policy is intact. But also finally, single life plans could utilise beneficiary nomination instead of going through the full trust process.

Considerations though, multi-cover plans with different ownership might require several trusts if you're going to go through that route, and of course, premiums might be higher for two single plans than a jointly owned one. But I think when you look at the quotes, there is quite minimal difference.

Now, if we have a joint life or earlier critical illness policy that's jointly owned, those benefits are that it is designed for shared financial commitments such as a mortgage. The lower overall premium cost is obviously a benefit, and it is simple. There's one plan, one premium, and one renewal date. But I think important considerations are there is only one payout a claim, and one party might not know about missed premiums. And I think it's easier for mismanagement of the plan if a relationship breaks down. So, it will be potentially more difficult to get the other party to agree to the plan being split, particularly if it's an acrimonious split or indeed if there has been some domestic abuse happening. So, I would ask you to consider after today the structure of how we set up a plan and whether to safeguard your clients going forward. Maybe two single life plans that are importantly individually owned might be a thing to talk to your clients about.

So, as we move on, I'm going to hand over to Fiona now to at outset to talk about how economic abuse is seen within the pensions world.

Thank you so much for that, Shelley. It's a hard topic, but so important, and I'm so glad that we're covering it today.

Now I'm going to move on and talk specifically about pensions. And I think most people will probably think pensions are safe from economic abuse in that you can't yourself, you can't even access them before you're 55 or soon to be 57. And whilst that statement is true to a certain extent during the accumulation phase, when you're accruing your pension or paying into it, there's certainly still scope for abuse during that accumulation phase, and even more opportunity during the decumulation phase or when you're receiving an income from your pension.

Would you mind moving onto the next slide Shelley? Thank you.

So, as we just said, there is more opportunity for economic abuse when you're able to access your pension. For instance, you could be forced or coerced into taking your tax-free cash before you intended to or be forced or coerced into commencing an income or taking more income than you need.

And that would obviously reduce the pension funds available for the future. And when you are older or when you've commenced retirement, your scope for further funding is limited, as you may have stopped working or reduced your hours, so you can't replace those lost funds as easily as you could perhaps when you were younger and still working full hours.

Also, if you've commenced an income, your funding would be affected by the Money Purchase Annual Allowance if you've triggered it, which would reduce what you can pay into your pension, importantly without a tax charge applying. And an abuser could also coerce you into putting your pension income into a joint bank account or an account that they control, and this would increase your reliance on them, which is part of the control or the abuse that Shelley mentioned at the start.

You could also be coerced into using your pension income for joint household expenses, and that would obviously, again, reduce the disposable income available to you. As part of the abuse or control, your dependency could be exploited if your pension provision is low or non-existent, and that would obviously limit your opportunity to escape from your situation.

We'll see in a few slides why it's even more prevalent for women. The abuser could also keep their own pension contributions or fund values a secret, or increase their contributions and limit yours. Pensions are individual plans, and whilst this might limit the opportunity for abuse, it's still important to remember that these opportunities still exist and to be aware of them and the signs that could be there.

So next, I'm going to talk about the gender pensions gap, and it's a good time to talk about it because it's an issue that we should all be aware of in the context of economic abuse. So firstly, the average pension pot for a 65-year-old woman is one-fifth of a man's, and there's a few reasons for this, and I think if you'd asked me why before I started looking into this, I might have said it's because of historic gender pay gaps. But there are much bigger reasons for the gender pensions gap. Firstly, women generally have lower-paid jobs, and that could be due to working fewer hours or due to childcare or adult caring commitments. If you are in a lower-paid job or have more than one lower-paid job, you may not actually have reached the automatic enrolment threshold for one or both of those jobs.

And whilst auto-enrolment has largely been a success in terms of, more people are saving more for their retirement, there are still groups, with low or no pension provisions, even since automatic enrolment. And it's mostly women who take time away from work to either care for children or elderly parents, and this results in periods where no pension contributions have been paid, or lower pension contributions are being paid due to working lower hours or part-time.

Also, we know pensions are often not considered when couples are divorcing, and this can be due to the costs involved, you know, involving a lawyer, lack of awareness or of what can be shared when divorcing. Or when offsetting is being used, it's more often the female in a couple who would receive non-pension assets such as the house, as they're more likely to be maintaining the larger portion of childcare.

And that can result in an an uneven or an even more uneven, if that's a phrase, pension provision after divorce. So now I'm going to look at a pension case study, and this is a case study from the Surviving Economic Abuse charity website. And I chose this one as it particularly relates to pensions, and it's during the accumulation phase, which I think most of us would expect to be protected or not able to be part of economic abuse.

“So, I was so proud of myself. I was earning and putting away for my twilight years. Yet, as he controlled the payments, he told me I had to stop paying into it. We argued, and he said he would continue the payments. And I met up with a friend this year from school, and he was talking about early retirement, and I thought I should look into my pension. I was heartbroken. He had not done what he'd said, and my pension was worth a quarter of what it should be.”

So again, highlighting the importance of, keeping an eye on your pension, particularly if someone else is likely to abuse that situation. There are more examples on the Surviving Economic Abuse website if you want to go and look there.

And now I'm going to talk about a different topic, and it's the homicide report. And if you didn't think economic abuse was important or worth talking about up until now, I think this part might change your mind. And we're going to have a look at a report called Hidden Risks, Fatal Consequences: Economic Abuse in Domestic Reviews.

And this was published earlier this year, and you can read more about it on the Surviving Economic Abuse website. The research for this report analysed 454 domestic homicide reviews involving intimate partner economic abuse. And it found that over half featured evidence that the victim experienced economic abuse, either from a current or ex-partner.

The report's key findings included in that, this first one I think you'll remember. One economic abuse victim loses their life every nineteen days. Just think about how frequent that is. 56% experience other forms of domestic abuse. 27% are threatened with harm or murder. 28% percent experience physical force. And the report reveals how abusers used economic abuse to trap victims and make it difficult for them to escape. Shelley talked about it with regards to mortgages. And this included evidence of abusers monitoring victims' phones, controlling their access to money, coercing them into debt, and in one case, using legal processes to maintain control and initiate contact on the day they were murdered.

And this report again highlights the need for economic abuse to be recognised as a wake-up call. Economic abuse is serious and a real risk factor for a future homicide. It rarely happens in isolation and normally happens alongside other forms of domestic abuse.

Now we're going to go on and look at some signs to look out for. We know what economic abuse and how it can manifest in mortgages, protection, and pensions, and how important it is to recognise and stop it, because it quite literally could save someone's life. So how do we actually recognise when it's happening? So first of all, it's definitely more common than you think, and I hope you've picked that up by now.

The examples on the screen are some instances where economic abuse could be happening. There could be more, but these are some examples. So firstly, not having enough money or asking to borrow some money. You might know someone has a good job and shouldn't be asking for money, or there's no immediate reason why they should need to borrow money.

The individual could have no or limited access to their joint finances or is given pocket money to buy lunch or petrol, et cetera, and this is a sign that they're being controlled through their finances. They might always use cash or have to ask their partner's permission to spend money, and that could be even small amounts. Remember that example about the Tesco meal deal earlier.

The ability to work could be controlled. They might want to work, but they're told they can’t or want to reduce their hours and be told the same thing. There could be a general change in someone's behaviour with, no explanation, such as a change in appearance or no longer going out or hiding purchases or telling you not to tell their partner. The cost-of-living crisis has made household finances much tighter, so there's more likelihood of abusers limiting their partner's access to money.

So, what would you actually do? What would you do if you suspect economic abuse? What should you do? So firstly, express some concern. Don't ask too many questions but say that help is available and offer to help. Take time to listen, recognise victims might take the time or not want to act immediately. Have information about domestic abuse support to hand. Encourage them to contact a helpline or some online support. You could even offer to be with them when they make that call. Provide some training for staff. At Royal London, for example, Shelley and I and some other customer services and marketing staff have received training. Or signpost to further information.

And how can the insurance industry support? I mentioned the training Shelley and I had, but there are other ways the insurance industry can support too. For example, minimise the times a victim survivor needs to provide their information. We can all get frustrated by this, but imagine, or imagine what this would be like if you're trying to make a call quietly or have limited time to make that call.

Communicate regularly with customers and employees about domestic abuse and share positive changes. Being comfortable talking about it is much better than ignoring it completely. Develop new ways of working to reduce barriers to insurance for victim survivors, and Shelley mentioned a few of these.

Create conditions which encourage disclosure. We know victim survivors are more likely to speak up to one of you, remember that stat, rather than the police. So, make them feel comfortable to do so and I showed you the list of what to do if you suspect abuse is happening. And the likelihood of members of staff within your own firms being affected by economic abuse is fairly high too. So, giving an opportunity for staff to share their experiences to hopefully receive help would be a great thing for an employer to do too.

So, onto some final words then, and thank you for joining us today. We know it's a difficult subject, but at the same time, it's so important. As Shelley said at the start, our industry has a vital role to play in recognising and responding to economic abuse, and we hope this webinar has given you some awareness of this form of abuse and how you can incorporate some of the ways of recognising or helping within your businesses.

And, ignoring why you should help, we know that the FCA has a particular focus on vulnerable customers, and this definitely fits in with this definition. So, we would say there's a responsibility to have procedures to recognise and signpost where economic abuse is apparent. So, some final, final words.

We wanted to leave you with these words from an economic abuse survivor. ‘It's the worst form of abuse because without money, you can't do anything, and without financial independence, escaping any other form of abuse becomes almost impossible.’

So here are our learning outcomes. I hope you enjoyed the session, and we've just got a next slide about the CPD reminder.

As a reminder, you'll be asked to complete a short survey. Your CPD certificate will be sent to you by email within 24 hours, so you don't need to request this separately. You must successfully answer all the questions before you can download your certificate. Again, thank you so much for joining us today, and we hope to see you at a future webinar.