Financial Abuse: What is it?

In this Key Learning Area we provide some common definitions of financial abuse and insights into the cost of financial abuse for victims and the broader Australian economy.

What do we mean by financial abuse?

There is not one agreed definition of Financial Abuse, but the essence is the same. Below are a couple of common definitions.

‘Financial abuse is the improper use of a person’s money or property without their knowledge or permission.’ (Source: ‘Safeguarding against financial abuse’, Carers Australia)

‘Financial abuse is a deliberate pattern of behaviour in which an abuser seeks to ‘control, exploit or sabotage’ their partner’s ability to acquire, use and maintain financial resources’ (Source: ‘The cost of financial abuse in Australia’, Deloitte Economics 2022)

In this topic, we have chosen to apply the second definition as it provides the opportunity to explore the issue of financial abuse in more depth and also encompasses the concept of economic abuse, which is referred to in some contexts as different to financial abuse.

 

Reflection

Based on these definitions, do you believe that you or someone you know may be the victim of financial abuse? If so, help is available. You are not alone.

What are the costs of financial abuse in Australia?

In 2020, victims of financial abuse in Australia incurred an estimated $5.7 billion in costs made up of:

  • $3.2B from withholding or controlling victim’s income or finance
  • $1.2B from refusals to contribute to shared household bills
  • $0.6B from refusals to contribute to shared expenses for children; and
  • $0.6B from liabilities for joint debt.

There is also a cost that is incurred by the broader economy as the result of financial abuse. In 2020, this was estimated to be $5.2 billion made up of:

  • $4.6B in lost productivity when victims are prevented from working by their abuser
  • $0.2B in mental health costs e.g. depression and anxiety disorders; and
  • $0.4B in deadweight losses. A deadweight loss is a cost to the economy associated with a loss in tax revenue, additional social welfare payments and health system expenditure.

(Source: ‘The cost of financial abuse in Australia’, Deloitte Economics 2022) Visit: https://www.commbank.com.au/content/dam/caas/newsroom/docs/Cost%20of%20financial%20abuse%20in%20Australia.pdf