Financial abuse is a hidden yet destructive form of control where one partner financially manipulates the other to exert power and control over them. This may have been exercised during the relationship, but it may also become prevalent during the divorce proceedings. Whenever it arises, it can have long-lasting and devastating effects on individuals and families. But what exactly is financial abuse? How do you recognise the signs, and what can you do about it? This article aims to provide an answer to all these questions and more.
Financial abuse is a hidden yet destructive form of control where one partner financially manipulates the other to exert power and control over them. This may have been exercised during the relationship, but it may also become prevalent during the divorce proceedings. Whenever it arises, it can have long-lasting and devastating effects on individuals and families. But what exactly is financial abuse? How do you recognise the signs, and what can you do about it? This article aims to provide an answer to all these questions and more.
If you are experiencing issues with your relationship and you feel you need legal advice to resolve matters, contact specialist family solicitor Maria Coster of Stowe Family Law. Maria has an excellent record in family law matters as well as being involved in a number of complex cases involving issues such as domestic violence, substance misuse, and parental alienation.
What is financial abuse?
Financial abuse is sometimes also referred to as coercive control. The Family Procedure Rules 2010 defines it as an “act or a pattern of assault, threats, humiliation, and intimidation or other abuse that is used to harm, punish, or frighten the victim” and as “an act or pattern of acts designed to make a person subordinate and/or dependent by isolating them from sources of support, exploiting their resources and capacities for personal gain, depriving them of the means needed for independence, resistance, and escape, and regulating their everyday behaviour.”
Additional provisions came into force as part of the Domestic Abuse Act 2021, where financial abuse was included within the definition of domestic abuse.
What are the signs of financial abuse in a relationship?
Financial abuse can take a variety of forms. In some cases, alarm bells may rings early, but in others it may not be triggered until long into the marriage or civil partnership. There are several financial abuse signs to be aware of, and the following are the most common examples:
- Forbidding you from working or sabotaging your employment opportunities
- Controlling how you spend your money
- Denying you access to your own or joint bank accounts
- Giving you an allowance to live on
- Running up larges debts on jointly held accounts without your permission
- Forcing you to account for any money you spend by showing them receipts
- Applying for credit cards or accounts in your name and using your personal information
- Withholding money for basic necessities such as food, medication, clothing, or housing
How does financial abuse affect divorce?
In circumstances where financial abuse is a factor, whether this was during the relationship or later in family proceedings, getting your ex to provide full and frank disclosure may prove to be a battle. This is particularly true in cases where they may have been withholding financial details for many years, and are attempting to continue to conceal and control assets during the divorce.
There are some legal tactics that can be used to challenge inadequate disclosure. Raising a questionnaire, and a schedule of deficiencies or obtaining a third-party debt order may help a spouse who is in the dark about their matrimonial finances. The court may also be asked to draw negative inferences if the disclosure remains questionable or incomplete.
To what extent will financial abuse impact on the outcome of family proceedings?
Financial conduct should be taken into account by the court when it would be inequitable to disregard and also where its impact is financially measurable. There are four situations in which conduct may be considered in financial cases. These are:
- Gross and obvious personal misconduct, but only where there is a financial consequence. This includes financial abuse provided the evidential threshold is met
- Add-back arguments where one party has “wantonly and recklessly dissipated assets”
- Litigation misconduct which should be penalised in costs rather than affecting financial distribution
- Drawing negative inferences over the extent of the assets following an individual’s failure to provide full and frank disclosure
In 2023, the first case surrounding financial abuse was found to be conduct related, as defined by the Matrimonial Causes Act 1973. Here, the husband was functionally illiterate and had relied on the wife for the entirety of their lengthy marriage to manage their financial resources. The husband argued that the wife had exploited his illiteracy by funnelling off joint funds and concealing them from him and the court. It was found that the wife had undisclosed assets, but the court also added back an additional sum in respect of misappropriated rental income from a jointly owned property. The court also made a small departure from equality to reflect the wife’s poor conduct, with the husband being awarded 53% of the total matrimonial assets. The wife was also ordered to make a significant contribution towards the husband’s legal costs.
Is financial abuse illegal?
Although the Domestic Abuse Act was updated in 2021 to include financial abuse, it does not mean that it is considered a crime in its own right. What legal recognition means is that police, the courts, and other agencies who may become involved with families, should be more aware of financial abuse. They should, therefore, be more likely to be able to identify a pattern of such controlling and coercive behaviour, and respond accordingly.
How can I protect myself from the effects of financial abuse?
There are several things that you can do to protect your finances and prevent the long-lasting impact of financial abuse. These include:
- Avoiding joint accounts – if you can, don’t agree to opening one at the outset of the relationship. If you already have one, you can ask the bank to freeze it, so that neither of you can gain access to the funds in the account
- Tighten up security – make sure that only you know your PIN and online banking passwords. Change them when you separate, particularly if you think your spouse has access or can guess them easily
- Know what is in your name – this includes any joint assets, bank/credit accounts, and mortgage or tenancy agreements. This will give you a clearer idea of your financial position
- Be in control of paperwork – know where important personal and financial information/documents are kept. This can be especially important if you need to leave your home in an emergency due to your spouse’s abusive behaviour
- Educate yourself about financial matters – this helps to prevent the temptation to hand over control to your spouse
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