The Financial Conduct Authority (FCA) has a key role to play in tackling economic abuse.
This is according to Joanna Legg, head of consumer policy and outcomes at the FCA, who writing in a blog explained the regulator has a role in securing an appropriate degree of protection for consumers of financial services – including economic abuse.
The subject of economic abuse was highlighted by Johnny Timpson, who last November told Health & Protection that insurance professionals should be given mandatory training on economic abuse.
His comments followed a report from Surviving Economic Abuse (SEA) published earlier that month highlighting research by Aviva that showed two in five British adults have experienced a form of economic or financial abuse at some point during their lives.
In her blog, Legg explained that financial abuse can involve the manipulation of financial products and services and can include loans taken out in the victim-survivor’s name, bank account takeover or the use of joint life insurance policies as a threat.
Role of the regulator
But Legg also pointed out that under its consumer protection objective, the FCA has a role in securing an appropriate degree of protection for consumers of financial services.
“We understand that experiencing abuse can leave those affected in vulnerable circumstances, impact their experiences of financial services, and potentially put their financial future at risk,” Legg said.
“We care about this issue and want victim survivors to experience better and more consistent treatment from their financial services providers.
“We have already seen great initiatives from some firms and professional bodies, and we want the sector to build on this.”
Consumer Duty
But Legg also warned that the FCA’s Consumer Duty sets higher and clearer standards of consumer protection across financial services, requiring firms to put their customers’ needs first.
“Looking through this lens we encourage firms to be alert to the possibility of coercion and financial control to reduce foreseeable harm,” she added.
“When a report is made, firms should treat the victim-survivor appropriately, so they do not experience further avoidable harm.
“This could include how firms treat repayment of any debts and how they are recorded. We signalled our expectations when we wrote to lenders about this in March 2024.
“We are embedding awareness of issues around domestic financial abuse throughout the FCA with internal activity and training.
“We will continue to work with the Financial Ombudsman Service, government, domestic abuse charities and trade associations, to understand how firms are identifying and managing harm for victim survivors of domestic financial abuse.
“We will also look at whether there’s any further action needed to help the victim-survivors as they rebuild their lives.”
Action taken
In terms of action in this area, Legg pointed out that the FCA has looked into the evidence of harm, including experience and research from experts, like its Consumer Partnerships Network members and the Surviving Economic Abuse charity and considered how domestic financial abuse manifests across the sectors it regulates.
Legg added the FCA has taken that knowledge to engage with government, trade associations, firms and fellow regulators to drive improvement and looked at practice both here and in other countries, to help set priorities for focused action.
“She said that while this is a “complex” problem and there is “no simple or quick fix”, the FCA is seeing firms working to improve consumer outcomes.
This has included:
- Innovative new approaches to help affected customers recover. Legg said the FCA has seen examples of banks providing safe spaces for victim-survivors to ask for help, or in some cases going above and beyond by providing access to small ‘flee funds’ for victim-survivors.
- Close work with specialist organisations to find ways to give victim-survivors back control of their accounts, including the ability to block abusive messages sent alongside payments.
- New initiatives from industry bodies like UK Finance, the ABI and CII to improve awareness and understanding of issues across members, as well as highlighting best practice and monitoring progress.
Raising awareness
But Legg also pointed out that there is more that can be done to raise awareness and support consistent treatment of victim-survivors.
This includes staff training to recognise the signs, referring victim-survivors to specialist support, and tools that can help consumers regain control.
She added the FCA discusses some of this best practice in its Guidance for Treatment of Customers in Vulnerable Circumstances.