Bridging looks to its role in fighting financial abuse

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financial abuse

Campaigns to crack down on the often hidden crime of financial abuse have followed figures suggesting cases rose sharply behind closed doors in lockdown. Financial institutions are now also looking more closely at their role in preventing financial abuse, as a key line of defence for vulnerable customers.

In May 2022 HSBC UK announced it had made all its branches a “Safe Space”, where people experiencing domestic abuse can take their first step to financial independence by seeking specialist advice and support. Professional training in spotting signs of abuse has been provided to more than 4,000 employees across all HSBC UK branches.

The link to banking is no coincidence – economic abuse in particular is a legally recognised form of domestic abuse and is defined in the Domestic Abuse Act. Speaking at the time, Sarah Mayall, head of brand marketing at HSBC UK said: “Escaping an abusive relationship isn’t as simple as walking out of the door. Through this campaign we hope to raise awareness of the service and the shocking link between domestic and economic abuse.”

So far no such similar initiatives have been launched in the bridging sector. But there is a sense this part of the industry is not without responsibility too, especially as it often falls outside the consumer protection rules of the regulated financial sector.

Barry Ireland, business development manager at Apex Bridging, said: “I think the industry as a whole, as facilitators across financial services, hold a responsibility to be vigilant and have heightened awareness of not just potential financial abuse, but the overlapping considerations and obligations like how firms look out for and protect vulnerable customers.”

Apex, similar to other bridging lenders, has, said Ireland, a “clear and obvious responsibility” to have robust customer ID, verification and background checks, “to ensure we know who we are lending to”. Ireland said Apex also sees it as its responsibility to speak directly, face-to-face (typically over zoom) to every customer it lends to. Ireland said: “This gives us a fuller picture of each individual case, and also an opportunity to pick up on duress or undue influence being applied to the borrower.”

Where a transaction may be more atypical, for example a below market value purchase, Apex will also do additional ID and background checks on the vendor, and very often also speak face-to-face with the vendor, independently of the borrower. Ireland added: “In an unregulated sector, we feel an increased responsibility to get comfortable with and understand as much as we can about each individual scenario, to ensure we are lending responsibly.”

Nearly two out of five UK adults (39%) – approximately 20m people – have experienced economically abusive behaviour in a current or former relationship, according to a report by The Co-operative Bank and Refuge, the UK’s largest national domestic abuse charity, in October 2021. Yet, only 16% of people describe, or recognise, their experiences as abuse.

Tiba Raja, executive director at lender Market Financial Solutions, said it is also hard to see for financial professionals. She said: “Controlling finances to reduce independence or take advantage of victims is difficult to spot, especially as some loans are just done online. Creating more awareness and educating financial professionals about the signs and to provide a network of support where people can go is a great starting point.”

A code of practice would make professionals more astute about the issue, she added. “People need to know that there are places they can turn to if they are a victim of abuse. If banks and finance companies can clearly signpost that they are ready to support victims of financial abuse, then this could prove a hugely valuable safety net for those who are not sure what to do. Online advice, in-branch meetings, telephone and video consultations – a multi-faceted approach will be required to ensure the support can be effectively delivered.”

The government’s Money Helper website lists common signs of financial abuse. Some that financial professionals may find useful include encountering people under pressure to:

  • take out money or get credit
  • hand over control of accounts – this could include changing login details
  • cash cheques
  • add other names to their account
  • change a will
  • set up Direct Debits to pay bills which aren’t theirs
  • draw down, transfer or stop making pension payments
  • take out new insurance policies or stop paying existing ones

Raja said training in spotting these signs and similar should be required across the bridging industry. “Professionals need education on key warning signs to watch out for when coming in contact with someone who might be a victim of financial abuse. The answer is often more thorough due diligence in assessing each client on a case-by-case basis. A meticulous and responsible approach to customers is a way to identify any potential issues.”

A key recommendation from the 2020 Know Economic Abuse report was that a code of practice for financial institutions should be developed to create a more informed, supportive and consistent response to disclosures of economic abuse in the context of intimate-partner violence.

Market Financial Solutions would welcome wider guidance on the issue, and to hear what other lenders are doing, while continuing to evaluate its own best practices, said Raja: “The bridging sector must always seek out ways to progress and safeguard against questionable practices. A code of practice that spans the financial services industry would be worthwhile.”

She added: “This will also inform the way in which financial institutions can work collectively to tackle this problem. Strength in unity and having strong large institutions backing this is a clear sign that it’s not acceptable and something has to be done about it.”

Apex’s Ireland agreed: “There are arguably increased risks within the unregulated space of bridging, and having a more informed, supportive and consistent response from the financial sector as a whole, inclusive of bridging, to such disclosures can only be a good thing for all.” Consensus around this difficult aspect of finance could see the bridging sector help lead the way on stamping out financial abuse, wherever it hides.

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