What is economic abuse?

According to a new report by the charity Surviving Economic Abuse (SEA), one in six UK women have been affected by economic abuse in the last 12 months. Encompassing the restriction, sabotage, or exploitation of victims’ economic resources, this kind of abuse is most often directed at women by their partners.

While economic abuse has been recognised as a criminal offence in the UK since 2021, the government’s violence against women and girl’s strategy, published last month, renews commitments to tackle it.

So, what exactly is economic abuse? Which digital banking tools are used to facilitate it? And how can product design be re-imagined to improve survivor/victim safety.

The contours of economic abuse

A landslide of reports and surveys have thrown into sharp relief the scale of the economic abuse issue. The charity StepChange says that coerced debt now affects 3% of UK adults, equivalent to 1.6 million people. Refuge, meanwhile, finds that a breathtaking £14 billion of personal debt is the result of economic abuse. And, in an SEA survey of 1,000 women, one in eight who held a joint mortgage said they had suffered economic abuse as a result – some even driven into debt and homelessness.

Speaking to The Observer, one victim of economic abuse, Maria (not her real name), said that her ex-partner had retained total control of her finances for 11-and-a-half years after the relationship ended. He had saddled her with a joint mortgage, which ultimately resulted in a repossession that damaged her credit score for a further six years.

Left unchecked, economic abuse will be inflamed by market forces. At the World Economic Forum (WEF) in Davos this year, the CEO of Verizon, Dan Schulman, warned that in two to three years, AI will match human cognitive abilities across most tasks, and in seven to eight years, humanoid robotics will arrive. If we consider that the segment of the population most at risk of AI-induced redundancy is women (up to three times more, in fact), it is easy to see how reliance on men for economic security could rise. These forces place women in an exponentially precarious economic position.

Digital banking: A vector of abuse

One of the key means by which economic abuse is perpetrated in the UK is via digital banking tools. The virtual element of modern retail banking enables many abusers to slip through traditional guardrails.

A particularly common vector of abuse seen by banks is joint accounts. For example, as it stands, large withdrawals do not require consent from both customers. In its report, StepChange argues that banks should change the terms and conditions of joint accounts – treating account holders as “tenants in common”, i.e., as though they are in joint home ownership. In the case of abuse, banks would then be permitted to split account balances.

Solutions are also being proposed at the production ideation level. Victim/survivor-first design, for instance, could insert into onboarding processes veiled opportunities for prospective customers to disclose attempted abuse, while AI could work behind the scenes to detect unusual behavioural patterns.  

But proactivity does not have to mean big investment or cutting-edge technology. Financial institutions could enhance their training programmes, so that staff members develop a deeper awareness of economic abuse and the signs that betray the presence of coerced debt.

The work in progress…

With countless charities having sounded the alarm on economic abuse, the financial services industry is tooling up. Banks are working to ensure abuse is more easily spotted and thwarted. The Financial Conduct Authority (FCA), for its part, is working closely with the government to reduce the risk of financial services being wielded to commit economic abuse – testing proposed interventions and workshopping guardrails. Victims are being encouraged to reach out to their provider and report any concerns once it is safe to do so.

If the industry is to decisively clamp down on economic abuse, however, victims/survivors, banking professionals and regulators will have to come together and provide an integrated framework – spanning product design to compliance – that serves to curtail the ongoing weaponisation of financial services.