Report calls for mortgages to be redesigned
Banks need to redesign financial products to help prevent their use as tools for financial abuse or coercive control, according to a new report authored by former bank executive Catherine Fitzpatrick.
The report, Designed to Disrupt, calls for the overhaul of banking products to prevent or minimise harm. It explores the ways financial products like mortgages and credit cards can be used to conduct financial abuse, and recommends changes to terms and conditions that could help prevent that abuse.
“A bank account should be no place for abuse,” Fitzpatrick told The Australian.
The report was undertaken for the Centre for Women’s Economic Safety and called for banks to make changes.
“Don’t wait until after the abuse has happened,” Fitzpatrick said. “Make the change to make it much harder and to make it really clear to perpetrators you’re not allowed to do this.”
Fitzpatrick told The Australian that talks were occurring with regulators, banks and consumer groups about the report's findings. She said she planned to specifically raise with the Australian Securities and Investments Commission how it can view the recommendations with regard to its own product design and distribution authority.
“The design and distribution obligation talks about product suitability and it’s also got a requirement to consider consumer vulnerability,” Fitzpatrick said. “What it doesn’t say is, ‘Think about how products might be used to inflict harm.’”
The report included comments from victims of financial abuse, including several in which one partner had stopped paying their share of a mortgage, The Australian reported. Another commenter said her partner maxed out their credit cards and left the bank to come after her for his debts. The report found that 13,000 customers had contacted one bank’s specialist teams over a 12-month period because they were experiencing domestic or family violence.
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To combat financial abuse through credit cards, the report recommended measures such as banks ensuring each cardholder was liable for spending on their card, applying a chargeback methodology for disputed transactions and prohibiting joint or secondary cardholders, The Australian reported.
For mortgages, the report suggested notifying customers at the point of origination about mortgage liability and options should a separation occur. The report also recommended offering choices about the type of contract, including 50-50 liability or another percentage.
Centre for Women’s Economic Safety head Rebecca Glenn said banks had an important role to play in preventing financial abuse. She said an earlier survey had found that most victims would turn to their bank for support over a domestic violence service.
The major banks have taken some steps to prevent abusive or violent communications by blocking payment or transfer messages of that kind, The Australian reported. Some banks are also sending warning letters to perpetrators, with the report finding that two banks implementing the practice found that about 90% of customers reported an end to the abuse.
Social Services Minister Amanda Rishworth called on banks to consider improvements to products and services that could help prevent gender-based violence, The Australian reported.
“Women should not have to choose between their financial security and their safety,” Rishworth said.
