Recognising Financial Abuse During Relationship Breakdown

Recognising Financial Abuse During Relationship Breakdown

1. A Time to Think About Domestic Abuse 

October is generally recognised as Domestic Abuse Awareness Month, sometimes referred to as ‘Domestic Violence Awareness Month’. Either way, the purpose is in the same: to raise awareness of the scourge of domestic violence and abuse. 

We would say that we prefer the more modern designation ‘Domestic Abuse’, rather than the older ‘Domestic Violence’. This is because it is now recognised that abuse within a personal relationship can involve much more than just physical violence, or threats of violence. 

Indeed, as we will see in a moment, the Government has recognised this, in the first statutory definition of Domestic Abuse. 

And in this article, we will examine one kind of non-violent domestic abuse: financial abuse, also referred to a ‘economic abuse’. (Note that some like to differentiate between ‘financial’ and ‘economic’ abuse, and while there are good reasons for this, we will keep things simple here by using the two terms interchangeably.) 

We will begin by looking at that Government definition of Domestic Abuse, and then we will look in some detail at some of the various forms that financial abuse can take – as we will see, financial abuse can be quite subtle, such that the victim may not even be aware that they are being abused. 

Once we have seen what financial abuse can look like we will then look at how victims can protect themselves from abuse. 

Lastly, we will look at how perpetrators can continue the abuse beyond the breakdown of the relationship, by using the court process itself as a tool of continued control. 

2. Financial Abuse as Domestic Abuse  

As we indicated above, there can be a misconception that domestic abuse only comprises physical violence, or threats of violence. This is most definitely not the case, and it is essential to understand what can comprise domestic abuse. 

In 2021 the Government for the first time provided us with a statutory definition of domestic abuse, and it is important that it is widely known and understood. 

The definition begins by explaining that the behaviour of one person towards another to whom they are “personally connected” is abusive if it consists of any of the following: 

• Physical or sexual abuse; 

• Violent or threatening behaviour; 

• Controlling or coercive behaviour; 

• Economic abuse; 

• Psychological, emotional or other abuse. 

So, we see that ‘Economic Abuse’ is specifically included in the definition. 

And the definition goes on to explain that Economic Abuse means any behaviour that has a substantial adverse effect on the victim’s ability to: 

• Acquire, use or maintain money or other property, or 

• Obtain goods or services. 

Having defined economic (or financial) abuse we must now recognise what it is, and when it is happening. 

3. Types of Financial Abuse 

Financial abuse can take many forms, and it would be quite impossible to make a definitive list of all possible types of financial abuse. However, these are examples of some of the more common types that can occur: 

• Controlling the victim’s access to money – This can be done in several ways. For example, if the abuser controls all of the household money, then they can require the victim to ask the abuser for an allowance from them every time they need money. Obviously, they can then refuse or restrict the amount of the allowance. 

• Controlling when and how money is spent – The abuser can take full control of the household finances, giving the victim no say in how and when money is spent.  

• Making the victim justify every purchase – Similarly, the abuser can require the victim to justify every purchase they make, sometimes with threats of ‘punishment’ if the abuser does not approve the purchase. 

• Stealing the victim’s money – If the victim has money in the form of cash, then the abuser can simply steal it from them. 

• Misusing money in joint bank accounts – Often the victim and the abuser will share a joint bank account. This will obviously give the abuser the opportunity to abuse the account, perhaps by withdrawing most of the balance in the account for their own use, or by purchasing expensive items for themselves using the money in the account. 

• Requiring the victim to pay household bills – An abuser can insist that all, or certain, household bills are paid by the victim. To ensure this happens, they can also require the bills to be in the victim’s name, so that the abuser has no liability to pay them. 

• Running up debt in the victim’s name – An abuser may, for example, apply for loans in the victim’s name, by using an app on the victim’s mobile phone. 

• Preventing the victim from working – Often an abuser may seek to control their victim by preventing the victim from working, or by restricting the victim’s working hours. 

• Requiring the victim to hand over their pay – If the victim does work then the abuser may require that the victim hand over their pay. This behaviour may then be coupled with insisting that the victim ask them for an allowance when the victim wants money. 

• Ensuring all assets are in the abuser’s name – While an abuser may require debts be in the victim’s name, they may also require that all assets be in their name. And this can mean that the abuser keeps the assets after the relationship breaks down, particularly if the couple aren’t married. 

• Controlling the use of property – Sometimes, a victim will require the use of property for financial reasons, for example a mobile phone to make payments, or a car to get to work. The abuser may therefore seek to exert financial control over the victim by restricting their access to these things.  

• Hiding assets – An abuser will often seek to hide their own assets, and keep their financial information secret. They may do this to make it seem to the victim that the abuser is less able to pay for things, or the abuser may be trying to ensure that the victim does not know about the assets, so that they do not make a financial claim against the assets should the relationship break down. 

4. Remedies for Victims of Financial Abuse 

Realising that they are being financially abused is, of course, only half of the battle for victims. They then need to do something about it. 

Obviously, bringing the relationship to an end will stop most forms of financial abuse. 

But bringing a relationship to an end can be easier said than done. For example, what if the victim has nowhere else to go, and the abuser refuses to leave the home? In such a situation the victim may be able to apply to the court for an Occupation Order, requiring the abuser to leave the home. The Occupation Order can also require the abuser to pay certain outgoings in relation to the property. 

They may also ask the court to make a Non-Molestation Order. A Non-Molestation Order can include many provisions beyond simply prohibiting the abuser from molesting the victim. It can, for example, prevent the abuser from contacting the victim, prevent the abuser from going to the victim’s place of work, and prohibit the abuser from damaging the victim’s property. 

Of course, ending the relationship does not necessarily resolve issues caused by financial abuse or (as we will see in a moment) bring the abuse to an end. 

If the parties were unmarried, there may be certain limited financial claims that the victim can make against the abuser (for details of which the victim is strongly urged to seek expert legal advice), and if the parties were married then it is likely that the victim will want to make a financial remedies claim against their abuser, seeking such things as a transfer of property, a lump sum payment, maintenance, and a pension share.  

5. Financial Abuse Continued into Financial Remedy Claims  

It is now well recognised that financial abusers, who are often in a far stronger financial position than their victims, can continue their abuse in the course of financial remedy proceedings on divorce, effectively using the proceedings as a tool of abuse. They can do this in a number of ways, including: 

• Failing to engage in negotiations – Thereby forcing the victim into making a contested application to the court, with all of the time, stress and expense that that entails. (They may also refuse to engage in mediation, or any other form of non-court dispute resolution.) 

• Failing to make full financial disclosure – This is a common strategy of abusers. The court will require them to make full disclosure of their finances. But they will stymy the victim’s claim by failing to make full disclosure, or failing to make any disclosure at all. This will cause the proceedings to take far longer, and involve more expense, as the court takes action to force the disclosure. 

• Hiding assets – By the same token, the abuser can hide assets, as mentioned above, in an effort to prevent the victim from making a claim against those assets. 

• Acting in person, when they can afford to instruct lawyers – Sometimes an abuser will feel that their ability to further abuse their victim within the course of financial remedy proceedings is limited by their own lawyers, who will obviously be expected to comply with court rules and orders. They will therefore choose not to instruct lawyers, so as to leave themselves free to ‘do as they wish’. 

• Exhausting the victim’s resources via protracted litigation – As mentioned above, contested financial remedy proceedings can be very expensive. One tactic that abusers use, therefore, is to deliberately prolong the proceedings, in an effort to exhaust the victim’s ability to continue to pay for the proceedings. 

• Framing the victim as untruthful – An abuser may try to persuade the court that their victim is not being truthful. For example, they may claim that the victim is themselves not disclosing assets, or that they are exaggerating about the value of their claim against the abuser. 

• Failing to comply with the final order – Lastly, an abuser will often fail to comply with the final financial remedy order, for example by not cooperating in the sale of a property, or failing to pay a lump sum by a certain time. Obviously, this will involve the abuser in further trouble and expense, as they have to take action to enforce the order. 

6. Conclusion: The Importance of Expert Advice 

When it comes to financial abuse, it is absolutely essential that the victim seeks expert legal advice. Whether they need to seek an occupation order or a non-molestation order, whether they need to make a financial claim after the end of a relationship, or whether they need to deal with abuse in a financial remedy claim (for example by seeking a costs order against the abuser), they will require expert advice. 

Walker Family Law’s team of specialist family lawyers can provide victims with the advice that they need, and can represent them in any necessary court proceedings. To speak with one of our lawyers, simply complete and submit the form, on this page.