Among its wide-ranging recommendations, the parliamentary joint committee (PJC) on corporations and financial services has included financial adviser education as an important step in combating financial abuse.
In its report, Financial abuse: an insidious form of domestic violence, PJC chair Senator Deborah O’Neill said the report represents “a moment of hope and potential change for our nation”.
“This report marks a crucial turning point in addressing financial abuse. Financial abuse is a tragically underacknowledged form of intimate partner and family violence that has often gone unseen or ignored,” O’Neill said.
“It has devastating effects on those it impacts. Financial abuse undermines the economic independence of the victim, often trapping them in cycles of financial hardship and dependency that can span decades, extending well beyond separation or divorce.”
According to Australian Bureau of Statistics figures quoted in the report, 27 per cent of women in Australia have experienced violence, emotional abuse, or economic abuse by a cohabiting partner.
Additionally, 16 per cent of these women have suffered from partner economic abuse, compared with 7.8 per cent of men.
“The scale of this issue is further highlighted by the fact that the financial toll on victims of financial abuse is estimated at $5.7 billion – almost $3 billion more than the total amount lost to scams in Australia in 2023,” O’Neill said.
Looking at financial advice specifically, the PJC recommended that “accounting bodies, financial advice and planning peak bodies, and victim-survivor advocate organisations co-design education resources for service providers to enable increased identification of financial abuse and timely reporting of suspected abuse to financial institutions and law enforcement bodies”.
According to the report, professionals such as financial advisers play a “crucial role” in identifying financial abuse, making sufficient training all the more important.
“The committee also identified that there are inadequate levels of ethical responsibility and professional training among financial planners, financial advisers, and accountants with respect to financial abuse,” it said.
“These professions play a crucial role as front-line service providers and often have a holistic and detailed knowledge of individuals’ financial situations beyond the knowledge of individual institutions, such as banks and insurance and superannuation providers.”
Along with improved training around financial abuse, the committee said there should be “explicit professional responsibilities” around not facilitating such abuse within intimate partner or family contexts.
This, it said, is necessary to “ensure greater protections for victim-survivors and particularly individuals with comparatively low levels of financial literacy”.
The report also recommended that accounting and financial advice industry bodies “develop and review ethical obligations of their profession in relation to receipt of instructions which may have a financial abuse motive”.
However, it added that the bodies also need to institute “accompanying penalties” for any member who “actively enable or facilitate financial abuse on behalf of their clients where there is no other reasonable basis underlying the instructions given by the client”.
In the Financial Advice Association Australia’s (FAAA) submission to the inquiry in June, chief executive Sarah Abood noted that “financial advisers are uniquely positioned to detect signs of financial abuse” given the close nature of adviser–client relationships and their thorough understanding of their assets.
“Despite this, research conducted by the FAAA alongside members shows that there is no clear method of reporting or assisting clients who are subject to financial abuse,” Abood said.
“Through clear guidance, training and support, financial advisers can help protect clients and other family members from financial abuse and support them in regaining financial independence.”
She also highlighted the complexity of financial abuse, noting that it can present in a multitude of ways, such as unauthorised transactions, coerced changes to wills or financial documents or exploitation of financial resources.
“Financial abuse is often challenging to identify, making it a difficult issue to address. Some victims may not even realise they are being abused, especially if the abuse is subtle or if it occurs within families,” Abood said.
The FAAA wants to do all in its power to “stop this serious and insidious form of domestic and family violence”, she said, and help protect “vulnerable Australians” who may be suffering from abuse.
Aren’t all these levies imposed on our industry financial abuse?
So someone else from Canberra telling me I’m an important member of a profession but I’m not a professional.
Seriously jog on the lot of you.
I’m against financial abuse, but I’m sick of being spoken to in this way and told I shoold be accountable for things no other profession is accountable for.
“The committee also identified there are inadequate levels of ethical responsibility and professional training among financial planners, financial advisers and accountants with respect to financial abuse” !!!!!!!!
Wow !!
Have you seen the ethical, professional and responsible behaviour coming out of Canberra lately ?????
No formal education, ethical training or experience required whatsoever to be a politician.
These idiots are running around making all the rules for everyone else when they are way below par themselves.
They can take a long walk on a short jetty.
Awesome more Red Tape and more Ethical education / CPD for Advisers.
When Advisers only look after 10% of Australians.
What’s the PJC doing about the other 90%???
Time to end the Annual Fee Consent Form red tape abuse against Retail Advisers.
Sadly, this is a social issue, complicated by victims being reluctant to press charges out of fear, including that of financial loss. Often, the victim will alter their story and compromise those attempting to “help”. Maybe, stop the drugs, alcohol and gambling…. whoops? commercial interests? lobby groups?
“No.”
This relentless “virtuous” piling on to financial advisers, orchestrated by virtue-signaling governments and rubber-stamped by the FAAA, has to stop. Advisers are already under immense regulatory and professional burdens, with little to no protection from the very associations meant to advocate for them. Instead, the FAAA once again chooses to align itself with the whims of a government desperate to appear progressive, rather than standing firm on principle.
Where is the data to justify this crusade? Has anyone produced credible evidence of financial abuse within the advised client population? It’s glaringly obvious to those who have worked in the field that relationships involving financial abuse rarely, if ever, engage with financial advisers. The affected population is minuscule. And yet, here we are again, discussing imposing yet another layer of training, regulation, and penalties on a profession already stretched thin.
This is not a “crucial turning point.” It’s a gross misallocation of resources that could be better spent addressing financial abuse where it actually occurs. The FAAA’s inability to challenge these modern-day puritans and their crusades raises serious questions about its backbone. Is it really that hard to say “no” and advocate for advisers with principle and conviction?
It’s time for the FAAA to stop pandering and start protecting the profession. Enough is enough.
100%
Well said. Nail has been hit on the head.