Chapter 2Current legislation and regulatory arrangements

2.1This chapter of the report explores the effectiveness of existing legislation and regulatory arrangements that govern the ability of financial institutions to prevent and respond to financial abuse. This chapter will explore the effectiveness of the following legislation:

the National Consumer Credit Protection Act 2009;

the Privacy Act 1988 (Cth);

the Australian Securities and Investments Commission Act 2001;

the Insurance Contracts Act 1984;

the Superannuation Industry (Supervision) Act 1993;

the Family Law Act 1975 (Cth); and

state and territory laws and regulations.

2.2The Australian Securities and Investments Commission (ASIC) highlighted that currently there are no financial services laws explicitly directed towards how financial institutions should treat consumers experiencing financial abuse.[1]

2.3The Centre for Women’s Economic Safety (CWES) echoed this point and noted that most of the laws listed above were written before there was a good understanding of financial or economic abuse. CWES expressed that:

Some of the problems this has created have been addressed through legislative amendments, common law, and regulatory guidance, but there is more that can be done.[2]

2.4Diva Advocacy Solutions reported ‘[t]hese legislative measures, while well-intentioned, fall short in their practical application, allowing perpetrators to exploit gaps and continue their abusive practices’.[3]

National Consumer Credit Protection Act 2009

2.5The National Consumer Credit Protection Act 2009 (NCCP Act) is in place to protect consumers who borrow money. The NCCP Act came into effect on 1 July 2010, and it’s key protections include:

lenders, brokers and other credit assistance companies must check that loans they provide are affordable and suitable for your needs;

the right to apply for a repayment arrangement if you fall into financial hardship;

a default notice giving at least 30 days to repay any arrears before court action or repossession;

set procedures are to be followed when repossessing goods, including cars;

lenders, brokers and other credit assistance companies must be a member of the Australian Financial Complaints Authority (AFCA); and

caps on fees and interest for some types of loans.[4]

2.6The NCCP Act applies to most personal credit in Australia, including personal loans, home loans, consumer leases, credit cards, payday loans and investment loans for residential properties. Notably, the NCCP Act does not apply to buy now pay later (BNPL) products and pawnbroking loans.[5]

2.7More information on BNPL products can be found in Chapter 3 of this report.

Responsible lending framework

2.8The NCCP Act places clear Responsible Lending Obligations (RLOs) on credit providers to ensure they are not selling unsuitable credit to individuals. Credit would be unsuitable for a consumer if:

the consumer is unable to comply with the financial obligations under the contract, or if they could only comply with substantial hardship; or

the contract does not meet the consumer’s requirements and objectives.[6]

2.9Before individuals are given a loan or lease, credit providers must ask reasonable questions about the individual’s needs, goals, financial circumstances, and take reasonable steps to check the information received is correct.[7] ASIC’s Regulatory Guide 209 provides guidance on what is considered reasonable. However, ASIC does note:

The process of determining the kinds of inquiries and steps that are reasonable has been described as ‘scalability’. [As a credit provider you] … need to apply your own judgment in determining what is reasonable in the individual circumstances.[8]

2.10Where the provision or extension of credit has been assessed as unsuitable, the credit provider must not assist the consumer to enter into or extend the credit arrangement.[9]

2.11The Economic Abuse Reference Group (EARG) highlighted that RLOs can be used as a mechanism to help victims of financial abuse. RLOs can provide redress for irresponsible lending practices, for example in cases where victim-survivors are coerced into taking out credit facilities from which they derive no benefit.[10]

2.12However, National Legal Aid expressed concern that credit providers often miss opportunities to identify financial abuse by failing to comply with RLOs. If lenders do not inquire with the victim about their financial situation when presented with information that is inconsistent or indicates that the victim could not repay the loan without substantial hardship, they are not complying with RLOs.[11]

2.13National Legal Aid recommends that, where the financial institution did not comply with its RLOs, the financial institution should release victim-survivors of financial abuse from their loans and refund repayments the victim was coerced into making; and any evidence of the loan should be expunged from a victim-survivors’ credit report.[13]

2.14WEstjustice proposed that the NCCP Act be amended to include:

an express requirement that the lender must be satisfied a borrower is not experiencing financial abuse; and

an express requirement that the lender must independently verify the requirements and objectives of all borrowers.[14]

2.15WEstjustice also recommended that ASIC’s Regulatory Guide 209 should be updated to reflect the above suggestions.[15]

2.16The Australian Banking Association (ABA) agreed with WEstjustice’s recommendation and further specified that financial abuse should be formally recognised as a reasonable cause for a debtor’s inability to meet their obligations.[16]

Assessment of suitability

2.17The Australian Retail Credit Association (ARCA) brought to the committee’s attention the negative impact of RLOs on victim-survivors of financial abuse. ARCA noted that RLOs provide a credit provider with no or limited ability to extend or increase credit to victim-survivors of financial abuse or domestic violence in cases involving circumstances beyond their control. This means that a victim-survivor whose ability to earn an income, or maintain their usual income level, has been limited as a result of abuse may therefore fail to meet a potential credit provider’s ‘suitability criteria’.[17]

2.18ARCA also highlighted that, due to the financial abuse suffered, credit providers may deem victim-survivors a ‘credit risk’ and therefore are unable to provide or extend credit. Victim-survivors may have, unknowingly or due to coercion, had many small amount credit contacts such as ‘pay day’ loans taken out in their name by the perpetrator, which mean that, under RLOs, there is an automatic assumption that additional credit is unsuitable.[18]

2.19This sentiment was echoed by the Women’s Legal Service Victoria which highlighted that, when leaving an abusive relationship, victim-survivors might need to obtain further small loans to afford rent and essentials, which plunges them into a cycle of debt. This further debt can prevent victim-survivors from accessing mainstream credit and other services, such as utilities and phone contracts.[19]

2.20When victim-survivors are deemed unsuitable for credit, it can have serious consequences by hindering victim-survivors trying to leave abusive relationships, or victim-survivors who seeking credit to make a very challenging financial situation less difficult and who are taking steps to reduce the risk of further abuse.[21]

2.21Women’s Legal Service Victoria emphasised that credit providers’ ‘assessment of suitability’ is problematic, and reported:

… that some lenders do not take the due care and diligence that is required in assessing a person’s ability to make repayments, with inadequate assessment of income, expenses and other debt liabilities that would otherwise demonstrate the person does not have capacity to make repayments.[22]

2.22ARCA recommended that further clarification is needed in relation to the application of RLOs when victims of family and domestic violence, including financial abuse victim-survivors, are seeking to obtain credit. ARCA specify that such clarification should be informed by the lived experience of victims and victim-survivors, and could be in the form of regulatory guidance.[23]

National Credit Code

2.23Schedule 1 of the NCCP Act includes the National Credit Code (NCC), which replaced the previous state-based consumer credit codes and the Uniform Consumer Credit Code. The NCC is administered by ASIC, and applies to contracts where:

the lenders is in the business of providing credit;

a charge is made for providing credit;

the debtor is an individual or strata corporation; and

the credit was provided for:

• domestic purposes; or
• to purchase or renovate residential property for investment purposes or to refinance credit.[24]

24. The NCC provides that a debtor may give the credit provider a hardship notice if they believe that they will be unable to meet their obligations under a credit contract.[25]
25. Hopgood Lawyers highlight that the NCC currently has no specific obligations on financial institutions targeted at reducing financial abuse.[26]
26. Commonwealth Bank of Australia (CBA) emphasised that, in circumstances of family and domestic violence, a borrower may wish to leave a joint loan or account that was established under financial abuse without informing the other borrower (often the perpetrator). However, this causes difficulty under the NCC because financial institutions are required to notify all borrowers of changes to credit contracts such that, to comply with the victim survivor’s request, there may be a breach of relevant requirements under the NCC.[27]
27. In 2022, ASIC provided a temporary exemption, via a ‘no-action’ letter, with respect to these requirements for situations where a joint debtor is or was a victim of family and domestic violence, and the perpetrator of this abuse is the other joint debtor.[28]
28. Many inquiry participants recommended that this no-action letter from ASIC be made permanent within the National Credit Code and NCCP Act.[29] The CBA also noted that it may be valuable to review the outcomes delivered under the no-action approach.[30]
29. CWES submitted that the NCC should have special conditions for victims of family and domestic violence to support them to stay in their own homes. CWES recommended that ASIC provide an instrument and guidance within Regulatory Guide 209 to exempt credit providers from certain requirements that might prevent them writing a home loan to enable victim-survivors to stay in their own homes.[31]
30. CWES stated that this regulatory relief would enable lenders to write a mortgage for an individual who was previously on a joint account and has now separated from the abusive other party.[32]

Customer privacy and consent

Privacy Act 1988

2.31The Privacy Act 1998 (Privacy Act) protects individuals’ personal information and regulates how Australian Government agencies and private sector organisations (with an annual turnover of more than $3 million) can collect, use and disclose personal information. Part IIIA of the Privacy Act regulates consumer credit reporting.[33]

2.32Part IIIA of the Privacy Act sets out requirements applicable to credit reporting, including restrictions on the types of credit information that may be disclosed to credit reporting bodies, the circumstances in which that information may be disclosed by credit reporting bodies to credit providers and affected information recipients, and their handling of that disclosed information.[34]

2.33The NSW Ageing and Disability Commission highlighted that there are currently significant limitations on what financial institutions can proactively do in response to suspected financial abuse, primarily as a result of the Privacy Act.[35]

2.34The Privacy Act includes 13 Australian Privacy Principles (APPs) that apply to the agencies and organisations stipulated above, which are collectively known as ‘APP entities’. The APPs that are relevant to this inquiry include:

APP 3 – outlines when an APP entity may collect personal information about an individual;

APP 5 – provides that entities should take reasonable steps to ensure individuals are aware of certain matters when collecting personal information; and

APP 6 – provides that an APP entity must not use or disclose personal information for a purpose other than that for which it was collected (the primary purpose), unless the individual consents or an exception applies.[36]

2.35Many financial institutions are APP entities and therefore regulated by the Privacy Act. Consistent with APP 5, financial institutions must inform customers of the purpose for which information is being collected. Financial institutions are permitted under the Privacy Act to make disclosures for another purpose (secondary purpose) if:

the individual has consented to a secondary use or disclosure;

the individual would reasonably expect the secondary use or disclosure, and that purpose is related to the primary purpose of collection or, in the case of sensitive information, directly related to the primary purpose;

the secondary use or disclosure is required or authorised by or under an Australian law or court/ tribunal order;

a permitted general situation exists in relation to the secondary use or disclosure of the personal information by the APP entity;

the APP entity is an organisation, and a permitted health situation exists in relation to the use or disclosure of the information by the entity; and

the APP entity reasonably believes that the secondary use or disclosure is reasonably necessary for one or more enforcement related activities conducted by, or on behalf of, an enforcement body.[37]

2.36Westpac highlighted that, under privacy law, it is a requirement to obtain express, informed consent from a customer to record any sensitive information on their accounts, including extra-care flags.[38]

2.37The ABA echoed this concern and noted that restrictions imposed by the Privacy Act often mean that financial providers cannot support customers further when concerns are detected but a customer does not consent to having the matter reported.[39]

2.38The ABA further explained the challenges experienced by banks to respond to financial abuse as a result of the Privacy Act, specifically in relation to elder abuse:

The challenge arises where the bank suspects financial abuse (based on a customer’s financial transaction data), is not able to engage with the directly customer and is concerned for their financial welfare. The bank may seek to refer the case to a third party such as the police for a welfare check or adult safeguarding authority. However, the bank is not permitted to share personal and/or sensitive information with a third party / organisations without express informed consent, which in some circumstance, for example an older person with capacity limitations, is not able to provide.[40]

2.39Most small businesses are not currently covered under the Privacy Act and the associated APPs. WEstjustice highlighted that protections involving the use, disclosure and security of personal information, and appropriate rights to access and correct information, are important for victim-survivors but may not be available depending on the size of the entity that holds the information, even where they are providing financial or essential services.[42]

2.40The Attorney-General’s Department (AGD) undertook a review of the Privacy Act between 2020 and 2022, which was published in February 2023. The Government’s response to the Privacy Act review agreed or agreed in-principle to 106 of the report’s 116 proposals.[43] The Australian Government agreed in-principle that the small businesses exemption should be removed in light of privacy risks applicable in the digital environment.[44]

2.41Flequity Ventures recommended the Australian Government accelerate the planned review of the Privacy Act to ensure it does not impede support for victim-survivors of financial abuse.[45]

2.42Westpac recommended that the Privacy Act be amended to remove the onus of explicit consent from the customer to record sensitive information on an account. Westpac asserted that this would enable banks to proactively place notes or customer-care flags on accounts when it identifies actual or suspected financial abuse, helping the bank to respond and provide support accordingly.[46]

Credit reporting

2.43The credit reporting regime is set out in Part IIIA of the Privacy Act, and includes the associated Privacy (Credit Reporting) Code 2014. The Credit Reporting Code is a written code of practice about credit reporting under the Privacy Act. The Credit Reporting Code defines the obligations of Credit Reporting Bodies, Credit Providers and affected information recipients.[47]

2.44The Privacy Act sets out laws relating to consumer credit reporting, and it permits a wide range of creditors to report or obtain information from credit reports. This includes unregulated creditors such as BNPL providers, utilities and communications companies and businesses that lease goods.[48]

2.45For businesses to participate in credit reporting, they must subscribe to one or more credit reporting agency and the business must be a member of a recognised external dispute resolution scheme such as AFCA, the Telecommunications Industry Ombudsman or one of the state-based Energy and Water Ombudsman schemes.[49]

2.46Paragraph 20.5 of the Credit Reporting Code stipulates that an individual is allowed to request the removal of default information if the overdue payment ‘occurred because of the unavoidable consequences of circumstances beyond the individual’s control, such as a natural disaster, bank error in processing a direct debit or fraud’ and the individual has paid the debt or entered into a new arrangement to pay it off. EARG noted that, although family and domestic violence was not contemplated when Paragraph 20.5 was developed, it could likely be relied upon in cases of family and domestic violence to remove credit accrued as a result of financial abuse.[50]

2.47EARG reported that the group’s members see inconsistent practices by credit reporting bodies and credit providers. These include, for example:

offering a debt waiver due to family and domestic violence circumstances but insisting on reporting the default; and/or

refusing a request from a victim-survivor who wants a default or other negative information removed from their credit report.[51]

2.48Neither family and domestic violence or financial abuse is listed as a reason that a credit report can be amended. Women’s Legal Service Victoria proposed that, where family violence and financial abuse has impacted a victim-survivor’s credit score, there should be a systemic means to address this and support their recovery. Women’s Legal Service Victoria suggested that family and domestic violence be included as a discretionary reason that credit reports can be amended/repaired.[52]

2.49EARG recommended that the Credit Reporting Code be amended to specify that family and domestic violence, including financial abuse, should be considered ‘circumstances beyond the individual’s control’; and that ARCA develop a best practice financial abuse guideline for credit reporting bodies and credit providers.[53]

2.50Similarly, National Legal Aid proposed that credit reporting bodies develop guidelines for responding to financial abuse as well as a streamlined process for removing fraudulent entries on victim’s credit report. National Legal Aid also stipulated that the guidelines should provide that credit reporting bodies have authority under the Privacy Act to amend a credit report in fraudulent circumstances.[54]

2.51In February 2024, the Attorney General and Assistant Treasurer established an independent review of Australia’s Credit Reporting Framework in Part IIIA of the Privacy Act and Part 3-2CA of the NCCP Act. The review released an issues paper in April 2024 and sought public feedback on the operation of credit reporting in Australia, including in relation to financial abuse. The review is due to report in late 2024.[55]

Access to information for victim-survivors

2.52In situations where victim-survivors are not named on a mortgage—which can often be as a result of a perpetrator’s economic or financial control—but have been making monetary contributions to the mortgage, victim-survivors often have difficulty accessing information about or managing the loan and mortgage account even where they remain as the occupant of the house. This includes:

not being able to obtain any information about the loan’s terms or any arrears; and

not being able to put forward arrangements with respect to a home loan account to ensure they remain in the home.[56]

2.53This means that where victim-survivors are able to stay in the family home post-separation they are left in an ongoing state of uncertainty waiting for a default notice or order of possession to potentially come to the premises with no fixed right to receive these. WEstjustice emphasised that there is currently no specific provision in privacy legislation that canvasses this situation, or any consumer credit laws and associated guidance documents.[57]

2.54At the committee’s public hearing in Adelaide, Mr Adrian Ahern, Group Customer Advocate for Westpac Banking Corporation, noted that financial abuse is not a consideration under the Privacy Act:

… [Under] section 16A of the Privacy Act … there’s an exception … to be able to report serious threat to life, health and safety, but it doesn’t refer to financial abuse …[58]

2.55WEstjustice asserted that the threat of homelessness constitutes a serious threat to health and safety of victim-survivors and children, especially where it may expose them to continued violence.[59]

2.56At the committee’s public hearing in Melbourne, Ms Dacia Abela, a program manager from WEstjustice, spoke of an example of the significant impact that this issue has on victim-survivors:

… Abboudi, who is a single mother and has experienced significant violence. She’s not listed on the mortgage or the title of the property, despite her financial contributions. After she separated, she remained living in the family home with her children. Unfortunately, in that case, the perpetrator stopped making repayments to the mortgage, and he told her directly that he wanted them to be evicted from the property. Obviously, that places her in a great deal of stress. She’s worried every day about the imminent threat of eviction. This was a case where WEstjustice tried to contact the bank to find information about the possibility of the eviction and enforcement action being carried out. However, the bank would not provide us with any of that information, despite us simply asking that the enforcement of that just be put on hold until they sort out their family law property settlement.[60]

2.57EARG recommended the Privacy Act amended to specifically provide that circumstances like family violence and homelessness constitute a serious threat to life, health and safety of an individual.[61]

2.58This recommendation was supported by the ABA. However, the ABA specified that amendments to the Privacy Act should not be limited to family violence and homelessness and should cover financial elder abuse that takes place outside a family or domestic context.[62]

Australian Securities and Investments Commission Act 2001

2.59ASIC was established under the Australian Securities and Investments Commission Act 2001 (ASIC Act) and is tasked with overseeing financial services and protecting consumers. The ASIC Act grants ASIC the authority to:

regulate financial markets;

ensure market integrity; and

safeguard consumer interests.[64]

2.60ASIC administers the consumer law framework for financial products and services in Australia, which provides prohibitions on financial firms engaging in unconscionable, or misleading or deceptive conduct.[65]

2.61The Economic Abuse Reference Group Western Australia submitted that the ASIC Act empowers ASIC to oversee financial services and enforce compliance with NCCP Act and Corporations Act 2001.[66]

2.62At the committee’s public hearing in Canberra, Mr Alan Kirkland, an ASIC Commissioner, emphasised the limitations ASIC have to interfere with the functions of financial institutions:

… our role is in relation to understanding how firms are complying with the obligations they have to their consumers. To the extent that we might sometimes get involved in ideas such as recovering money, it might be where there is clear evidence that there has been misconduct that means consumers have suffered financial loss because a firm has failed to live up to its obligations. We might seek court orders requiring compensation, or we might seek agreement from the firm that they will compensate those consumers. It is typically about the relationship between the firm and the consumer that they have a contract with. Any extension into notions of financial abuse, where you’re bringing in other relationships that, in one sense, overlap with the relationship with the financial system and, in another sense, exist outside it, would be a significant reform.[67]

Insurance Contracts Act 1984

2.63There are two relevant legislative and regulatory frameworks for general insurance, the Insurance Contracts Act 1984 (IC Act) and the Design and Distribution Obligations (DDO). Both the IC Act and the DDO are administered by ASIC.[68]

2.64The IC Act provides the legal framework for general insurers, outlining the rights and obligations of insurance contracts. The IC Act outlines the responsibilities of both insurers and those who are insured, including the duty of utmost good faith and the duty to take reasonable steps to not make a misrepresentation. The IC Act also addresses fraudulent claims, pre-existing defects, and subrogation.[69]

2.65National Legal Aid emphasised that the IC Act and the Insurance Contracts Regulations 2017 (Cth) do not contain any specific provisions for consumers experiencing or impacted by family and domestic violence or financial abuse.[70]

2.66National Legal Aid further noted that the main source of guidance for insurers and consumers comes from the General Insurance Code of Practice and the Insurance Council of Australia’s guide to helping customers affected by family violence.[71] Further information on the code and guide can be found in Chapter3.

2.67At the committee’s public hearing in Canberra, Ms Catherine Fitzpatrick highlighted the IC Act’s limitations in this regard, noting the experience of victim-survivors trying to claim on insurance policies:

If you look at the Insurance Contracts Act, for example, it has a very detailed description of what a flood is and how you might respond to claims relating to a flood. It doesn’t include anything to do with domestic and financial abuse, and yet there are a huge number of claims that relate to property damage that are caused by perpetrators of domestic violence. What we don’t know is some of the figures. While we know that there are a number of claims that are denied because of a malicious damage exclusion— which means that you can’t smash up the house and then claim on it—in the case of a domestic violence matter you might have a perpetrator that deliberately damages assets or property, and the victim-survivor is penalised for that action and can’t make a claim. The insurers know that, but the Insurance Contracts Act doesn’t provide for those kinds of matters.[72]

2.68Wotton and Kearney expanded on Ms Fitzpatrick’s point and noted that, in joint policy holder situations, a perpetrator can make fundamental changes to a policy without the knowledge of the victim-survivor. A victim-survivor may find that they are unable to claim for damage caused by the perpetrator because they have cancelled the policy, changed the benefits, or the policy lapsed because the premium was unpaid without their knowledge.[73]

2.69Ms Fitzpatrick pointed out to the committee how perpetrators can cancel insurance policies to inflict further abuse on victim-survivors:

In insurance, for example, you can cancel a joint insurance policy by calling or just doing it online. Most insurers don’t check with the co-insured or ask, ‘Are you comfortable with this?’ which leaves somebody uninsured.[74]

2.70Wotton and Kearney pointed out that damage to property is a common feature of domestic violence and can be left without insurance when their property is intentionally damaged by a perpetrator and their policy has been cancelled.[76]

2.71To address this issue, it was recommended that the Part V, Division 2 of the ICAct be amended to include the incorporation of a ‘Conduct of Others’ clause as a standard term in retail insurance policies. This clause would provide insurers with the discretion to approve repairs, settlement payments, or item replacements for damage intentionally caused by a joint policyholder, that would typically be excluded from coverage because the damage was intentional.[77]

2.72Wotton and Kearney also proposed that the IC Act be amended to introduce a requirement that insurers must notify both policyholders of any request to cancel or modify the terms of the insurance policy.[78]

2.73CWES highlighted that, if a victim-survivor has a claims history because of damage caused by the perpetrator, they will also face more expensive premiums in the future.

2.74 The Financial Rights Legal Centre recommended the IC Act be amended to provide insurers with more leeway to deem a joint insurance policy to be a composite policy in situations involving separation or divorce of co-insurers, or in situations where a victim-survivor’s claim would ordinarily be denied due to financial abuse or coercive control.[79]

Superannuation Industry (Supervision) Act 1993 and Superannuation Industry (supervision) Regulations 1994

2.75The Superannuation Industry (Supervision) Act 1993 (SIS Act) and Superannuation Industry (supervision) Regulations 1994 (SIS Regulations)are the main relevant legislation for the superannuation industry.[80]

2.76The SIS Act provides provisions for the management of certain superannuation funds, approved deposit funds and pooled superannuation trusts and for their supervision by ASIC, the Australian Prudential Regulation Authority (APRA) and the commissioner of Taxation.[81]

2.77Superannuation is often the largest asset people own besides their home, and the many inquiry participants identified that the legislative and regulatory systems in super are not adequately supporting victim-survivors of financial abuse.[82]

Self-Managed Super Funds

2.78Self-Managed Superannuation Funds (SMSF) are vulnerable to manipulation by perpetrators, due to their lack of regulatory oversight. Public Trustees of Australia highlighted that there is currently $900 billion of assets in SMSFs.[83]

2.79Future Group highlighted that, although APRA is the prudential regulator for the superannuation industry, it does not regulate SMSFs. SMSF are supervised by the Australian Tax Office (ATO). The Future Group further highlighted that there is a greater risk of financial abuse in relation to SMSFs as a result of the regulatory framework for SMSFs. As SMSFs are designed on the premise of self-protection, there is reduced government intervention through regulation. As members of SMSFs protect their own interests, these funds are subjected to a less onerous prudential regime under the SIS Act.[84]

2.80Future Group explained how SMSFs can be used by perpetrators to commit financial abuse for victim-survivors:

For SMSFs the threat arises because the members of the super fund are its trustees. In circumstances of family violence involving the trustees of a SMSF, there is greater potential for one partner or family member to coerce another into making decisions or managing the SMSF in a certain way, and less external regulatory involvement or oversight to prevent that from occurring.[85]

2.81The Future Group also explained that, for SMSFs, the threat arises because the members of the super fund are its trustees. In circumstances of family and domestic violence involving the trustees of a SMSF, there is greater potential for one partner or family member to coerce another into making decisions or managing the SMSF in a certain way, and less external regulatory involvement or oversight to prevent that from occurring.[86]

2.82The Financial Wellbeing Collective echoed the Future Groups comments, and further noted that superannuation-related financial abuse can occur when a perpetrator steals personal information and commits fraud by establishing an SMSF in another name and transferring the funds to that account, which they control.[87]

2.83Ms Christina Hobbs, General Manager of Future Group, emphasised the ease with which a perpetrator can use an SMSF to take a victim-survivors superannuation:

Virtually anyone, regardless of their financial acumen, can shift their entire superannuation savings into an SMSF and out of the regulated environment of traditional funds, often with their partner as a co-trustee. Without a doubt, there are now thousands of victims of financial abuse whose abusers are also the trustee of their super funds. Our submission includes the example of Tracy Hall, a single mum who had $300,000 of her super, her entire life savings, stolen by her partner through an SMSF. It only took a few clicks and one signature. I’d like to note that Tracy Hall was actually an experienced executive in the financial industry.[88]

2.84A major disadvantage of SMSFs is that, unlike industry and retail funds, victims of theft or fraud (related or unrelated to financial abuse) cannot receive assistance from AFCA.[89]

2.85The Future Group recommended that the Australian Government invest in areas of research relating to better understand how financial abuse intersects with the superannuation system, particularly where one trustee of an SMSF is committing domestic violence against another.[91]

Super death benefits

2.86Super Consumers Australia emphasised that ‘the super death benefit system is well and truly stacked against victim-survivors of financial abuse and DFV [domestic and family violence]’.[92]

2.87Super isn’t automatically included as part of a person’s estate after they die. Instead, super fund members nominate beneficiaries directly to their fund to receive any super and life insurance they held, as their death benefit.[93]

2.88Under Section 10 and 10A of the SIS Act, a person can leave their death benefit to a ‘financial dependent’ or their legal representative. A ‘financial dependent’ includes:

a ‘spouse’ (legal spouse or a person who, although not legally married to the person, lives with the person ion ‘a genuine domestic basis in a relationship as a couple’); or

someone with whom they have an ‘interdependency relationship’. An ‘interdependency relationship’ includes relationships between two people who live together, and one or each of them provides the other with financial and domestic support.[94]

2.89Super Consumers Australia pointed out the differences between binding and non-binding death benefit nominations:

A binding nomination must be actioned by the super fund so long as it is considered valid under the rules … [in the SIS Act], but it is quite complex for members to put in place. Binding nominations require two adult witness signatures and typically involve submitting a hard copy form, which is inaccessible to many members – these nominations have to be renewed up to every three years. Alternatively, members can make a ‘non-binding’ nomination which is easier to do, as it typically involves filling in a simple online form. The fund can take non-binding nominations into consideration, but ultimately retains the discretion to distribute the benefit as it sees fit in accordance with the law.[95]

2.90Super Consumers Australia further point out that many people do not have a death benefit nomination in place, and for those that do it is common that the nomination is invalid under the SIS Act or is overturned by the super fund or AFCA.[96]

2.91The SIS Act and regulations do not permit super funds to adequately consider financial abuse or more broadly family and domestic violence circumstances when determining beneficiaries and the split of benefits when a member passes away. Super Consumers Australia asserted that this is a result of:

rigid definitions of financial dependence. For example, a victim-survivor may not meet the standard of financial dependence due to a temporary separation while, inversely, a perpetrator of financial abuse may meet the standard simply because they lived with the deceased or met the definition of a spouse;

a lack of legal clarity of how the presence of financial abuse impacts the nature and characteristics of financial dependence, which should be able to be weighed up when a trustee is making decisions about the distribution of super;

a requirement for valid binding death benefit nominations to be honoured even where there is a change in relationship circumstances—for example, where a couple is separated due to family and domestic violence; and

evidence thresholds for demonstrating financial dependence and spousal relationships that are difficult for many victim-survivors of financial abuse to meet but are often straightforward for perpetrators to meet.[97]

2.92Ms Julie Adams, the mother of Molly Wilkes, a victim of family and domestic violence whose superannuation upon her death went to her perpetrator, highlighted that:

… there are no requirements for a trustee of a superannuation fund to ensure that a binding death benefit nomination is made voluntarily and without coercion or duress. The requisite form simply must be completed and witnessed correctly and submitted to the trustee.[99]

2.93AFCA commented that, in situations where a victim-survivors perpetrator is the only person who legally qualifies as a dependent under the SIS Act, the perpetrator will receive the victim-survivor’s death benefit payment.[100]

2.94AFCA further commented that current superannuation legislation does not clarify the application of the common law rule of forfeiture to payment of death benefits:

Where it is established that the perpetrator was responsible for the death and morally culpable, the common law rule of forfeiture—that a person who unlawfully kills another cannot acquire a benefit because of the killing—may apply in the superannuation context. However, there is no legislation and no case law that establishes this.[101]

2.95The Future Group pointed out that elder financial abuse give rise to similar issues. A child who is successfully financially abusing and controlling their parent will often meet the criteria of being ‘financially dependent’ because of their abuse, whereas other siblings may not meet the requirement of dependency. Therefore, even in cases where a parent may have nominated multiple children as their superannuation beneficiaries, it is often the perpetrator of abuse that receives the superannuation balance where the victim has not explicitly directed their superannuation to their estate and established a valid will.[102]

2.96Ms Fiona Galbraith, Director of Policy for the Association of Superannuation Funds of Australia, noted that payment of death benefits can be the first instance of identification of financial abuse:

The payment of a death benefit represents the one circumstance where the trustee is more likely to become aware of financial abuse, in particular where the deceased member was subject to abuse, but on occasion it also will be that the deceased member has perpetrated the abuse.[103]

2.97Ms Misha Schubert, CEO of the Super Members Council, emphasised the restrictions current legislation places on super funds when processing death benefit payments:

… legally, if an abuser is an eligible beneficiary, super funds must pay that death benefit out to that person; there’s currently no discretion. Payments must be made even in cases of documented and systemic abuse, even if a coroner finds the abuse contributed to the person’s death.[104]

2.98Super Consumers Australia recommended that Section 10 and 10a of the SIS Act be amended to allow super funds to consider financial abuse circumstances when determining claimed beneficiaries’ eligibility, including where a binding nomination is in place.[105]

2.99The Association of Superannuation Funds in Australia recommended a potential change to superannuation legislation as follows:

… under the Life Insurance Act, there’s a mechanism to pay the proceeds of a life insurance policy directly to a court and the court determines to whom it is to be paid. We recommend that consideration be given to examining the costs and benefits of creating a similar provision in the superannuation legislation which would allow a death benefit in these circumstances to be paid to the court, and the court could then look at the appropriate distribution of that death benefit.[106]

2.100Future Group recommended that the SIS Act be amended so that a spouse or child who has perpetrated domestic or family abuse against the superannuation account holder in the past two years is considered an invalid beneficiary.

Family Law Act 1975 (Cth)

2.101The Family Law Act 1975 (Cth) (Family Law Act) is the main legislation relating to divorce, separation, children, parenting arrangements and property and financial matters. The Family Law Act sets out the law that the courts must apply when determining family law disputes.[107]

2.102Currently, the Family Law Act lacks specific financial abuse provisions but does include family violence. Section 4AB of the Family Law Act describes family violence as ‘violent, threatening or other behaviour by a person that coerces or controls a member of the person’s family (the family member) or causes the family member to be fearful’.[108]

2.103At the committee’s public hearing in Canberra, Ms Christina Hobbs expressed concern regarding the use of the court system to continue financial abuse against victim-survivors:

The final act of control that many abusers have when their victims leave is to financially ruin them for life, often by hiding and preventing access to any of the savings or liquid assets of the partnership and then drawing out any attempt at a settlement process, meaning that the victims can’t afford rent, can’t afford to pay the mortgage if required and, importantly, can’t even fund their own legal fees to ensure a fair settlement, exploiting failings in the court system and financial regulation.[109]

2.104The division of superannuation is considered as part of property settlements under Part VIIIB of the Family Law Act. These provisions allow the Family Court to make orders that split superannuation entitlements between parties in a divorce or separation, thus enabling an abuser to potentially exploit this process to gain financial benefits from their victim’s superannuation.[110]

2.105CWES recommended that Part VIIB of the Family Law Act be amended to protect victim-survivors superannuation from claims by perpetrators of family and domestic violence.[112]

Bankruptcy

2.106EARG highlighted the issues of bankruptcy and the Family Law Act. Victim-survivors are often forced into bankruptcy as a result of financial abuse, and this not only compounds the impact of financial abuse, but it also advantages the perpetrator in their family law proceedings.[113]

2.107If a victim-survivor of financial abuse is forced into bankruptcy, they are unable to seek orders pertaining to property that has vested in the trustee. However, the perpetrator is still able to seek an order for a property settlement and request that they be prioritised over the creditor, because a non-bankrupt spouse can seek an interest in property that has vested in the trustee, even where their conduct has contributed to the forced bankruptcy.[114]

2.108EARG acknowledged that the interaction between the Bankruptcy Act 1966 and the Family Law Act is intended to protect the non-bankrupt spouse but pointed out that perpetrators of family violence often exploit the system to the detriment of the victim-survivor who is left bankrupt, has no standing in family law proceedings, and often loses their home, while the perpetrator is able to seek priority over the property vested in the trustee.[115]

2.109EARG recommended the Family Law Act be amended to allow a victim-survivor who is made bankrupt because of financial abuse, to have standing to seek orders in relation to vested bankruptcy property.[116]

Family Law Act amendments

2.110On 22 August 2024, the government introduced the Family Law Amendment Bill 2024 (the bill) into the House of Representatives. The AGD stated that the focus of the bill is to amend the Family Law Act to:

… ensure the economic impact of family violence, including economic or financial abuse, is considered as part of a property settlement or a spousal maintenance matter, where relevant.[117]

2.111The bill would amend the definition of family violence in the Family Law Act to specifically identify economic or financial abuse-related conduct as examples of family violence. The AGD highlighted that the amendments would include the following examples as finically abusive behaviours:

forcibly controlling money or assets, including superannuation;

sabotaging employment or income, including potential employment or income;

forcing a family member to take on a financial or legal liability or status;

forcibly or without knowledge, accumulating a debt in a family member’s name; and

dowry abuse.[118]

2.112Additionally, the bill would insist that separated couples provide all relevant financial information and documents to each other and the court when a party prepares to start court proceedings or during court proceedings about a financial or property matter. This condition aims to assist victim-survivors of family and domestic violence, including financial abuse by supporting the early and transparent disclosure of all relevant financial information to ensure a just and equitable resolution of property and financial matters.[119]

2.113The bill also proposes a less adversarial approach to property and financial matters by providing the court with additional powers to manage evidence, particularly where family and domestic violence is present. This is intended to provide safeguards to protect and support victim-survivors by enabling courts to actively manage proceedings in a safer as well as less formal and less intimidating manner.[120]For example, the bill would enable the courts to dictate how evidence is to be presented, to limit or not allow cross examination of a particular witness, and to give directions or orders about the length of written and oral evidence.[121]

State and territory legislation and regulations

Enduring powers of attorney

2.114Powers of attorney are formal legal arrangements made under state and territory legislation that allow a person (the principal) to appoint another adult person or persons to make certain decisions on their behalf. Enduring powers of attorney (EPOA), unlike general powers of attorney, are instruments designed to continue in force should the person lose decision-making capacity in the future.[122]

2.115EPOAs are intended to promote the interests of the principal by allowing them to nominate who will make future decisions on their behalf, and to inform and guide what those decisions should be. However, if EPOAs are misused or applied incorrectly, whether intentionally or unintentionally, they may facilitate financial abuse.

2.116The Australian Human Rights Commission highlighted that financial institutions play a key role in preventing, detecting and responding to financial abuse through misuse of EPOAs. However, the commission noted that, under the current arrangements the inconsistencies in EPOA laws across Australian jurisdictions can cause unnecessary confusion, uncertainty and practical challenges for financial institutions required to act on EPOAs.[123]

2.117Currently, different states and territories have distinct forms, definitions and requirements relating to EPOAs. Further, the circumstances under which an EPOA becomes effective can differ, with some requiring medical certification of incapacity and others activating immediately upon signing. The extent of authority granted to attorneys can vary, with different restrictions and permissions in place across jurisdictions. Some states require EPOAs to be formally registered while others do not.[124]

2.118Many inquiry participants have highlighted the benefit of greater consistency in EPOA laws in Australia.[125] This was echoed by the consultation process conducted by the Standing Council of Attorney-Generals (SCAG), which commenced in September 2023.

2.119Dementia Australia and the Australian Human Rights Commission recommended the establishment of a national EPOA registry to ensure consistent registration and monitoring of EPOAs.[126]

2.120Westpac also supported the recommendation to implement a national EPOA register, but further recommended that a reporting body be established to manage the register. Westpac noted that this would result in banks validating and responding to active arrangements that are in place.[127]

2.121The Law Council of Australia emphasised the importance of the implementation of consistent laws relating to EPOAs before the government considers the development of a national register of EPOAs. The Law Council also supported the AGD’s recommendation regarding greater emphasis on education and awareness raising aimed at reducing elder abuse occurring through EPOAs, and EPOAs being the focus of future law reform work.[128]

2.122The SCAG proposed that, rather than undertaking further work on a national register, the focus of its EPOA work should be on achieving greater consistency in state and territory EPOA laws and greater emphasis on education and awareness raising to reduce elder abuse occurring through EPOAs.[129]

2.123The Australia Human Rights Commission also emphasised that addressing the inconsistencies in EPOA legislation will ‘become more urgent and pressing as Australia’s ageing population increases’.[130]

Committee view

2.124The evidence received by the committee has shown that there are gaps within current legislation that limit the ability of financial institutions to prevent and respond to financial abuse. The committee is encouraged to see that there are bills currently before the Australian Senate that would amend current legislation to better support victim-survivors but feels strongly that more can be done to in relation to credit, insurance and superannuation.

2.125The committee wishes to thank the victim-survivors who bravely shared their lived experiences, which provided invaluable information to the committee and contributed to the committee’s understanding of the real-world impacts and gaps experienced by victim-survivors of financial abuse in Australia. The committee wishes to also acknowledge that any future reform in this space should be done in consultation with victim-survivors. This consultation should seek to ensure that there are not adverse consequences resulting from implementation of reforms in a manner which is not trauma-informed, or responsive to the lived experience victim-survivors.

2.126That the Australian Government establish a mechanism for co-design with victim-survivors of financial abuse (including through representative groups) in relation to the implementation of legislative, regulatory and sector-driven reforms aimed at mitigating the prevalence and impact of financial abuse, including the recommendations of this report.

National Consumer Credit Protection Act 2009

2.127The NCCP Act provides consumer protection law for credit in Australia and governs those who provide credit, as well as contracts and transactions, and aims to ensure responsible lending. The NCCP Act sets out obligations for responsible lending, and the committee heard how RLOs can be used as a mechanism to help victim-survivors of financial abuse.

2.128Evidence received by the committee highlighted that RLOs can provide redress for negligent lending practices, such as victim-survivors who are coerced into taking out credit facilities from which they derive no benefit. However, the committee is concerned about the effectiveness of RLOs in providing redress in cases where lenders do not make sufficient inquiries about the financial situation of the victim-survivor as a party to the contract.

2.129The committee believes that expanding the NCCP Act and ASIC’s Regulatory Guide to specifically require lenders to be satisfied that all borrowers satisfy lending requirements, and that neither borrower is experiencing financial abuse is an important step in preventing irresponsible loans to victim-survivors who are coerced into taking out credit.

2.130The committee sees significant benefit in reviewing the current RLOs to consider options for supporting victim-survivors of family and domestic violence to obtain credit to support themselves and their families. The committee considers that keeping victim-survivors in their family home is extremely important, and that a review into the NCC and RLOs is needed to consider the best options to facilitate this outcome.

2.131That the Australian Government amend the National Consumer Credit Protection Act 2009 and ASIC’s Regulatory Guide 209 to specifically require:

that the lender must take reasonable steps to be satisfied that a borrower and any guarantor is not experiencing financial abuse; and

that the lender must take reasonable steps to verify the lending requirements and objectives of each borrower and any guarantor.

2.132That the Australian Government establish a review of Responsible Lending Obligations and the National Credit Code, informed by the lived experience of victim-survivors, to consider options for:

protecting victim-survivors of family and domestic violence to obtain credit; and

the inclusion of specific conditions to support victim-survivors of family and domestic violence to stay in their own homes.

2.133In 2022, ASIC provided a temporary exemption (via a no-action letter) with respect to the NCC’s requirements to notify all borrowers of changes to credit contract for situations where a joint debtor is or was a victim of family and domestic violence, and the perpetrator of this abuse is the other joint debtor.

2.134The committee heard unanimous support from inquiry participants to make ASIC’s no-action letter permanent through amendments to the NCC and NCCP Act. The committee supports this proposal as a step to aid financial institutions to better support victim-survivors of financial abuse.

2.135That the Australian Government amend the National Credit Code to require financial institutions to inform all borrowers of changes to joint credit contracts in circumstances of reasonably suspected family and domestic violence, including financial abuse.

Customer privacy and consent

2.136The Privacy Act protects individuals’ personal information and regulates how Australian Government agencies and private sector organisations can collect, use and disclose personal information, including credit reporting.

2.137Evidence received by the committee has shown that financial institutions are hindered by the Privacy Act in relation to identifying, responding to and reporting financial abuse. Financial institutions emphasised to the committee that, under privacy law, it is a requirement to obtain express, informed consent from a customer to record any sensitive information in their accounts, including suspected financial abuse.

2.138The committee acknowledges that the Privacy Act currently presents a significant barrier to financial institutions providing appropriate support to victim-survivors. The committee considers it essential that the Australian Government consider potential mechanisms, including legislative action if required, to better enable financial institutions to document actual or suspected financial abuse.

2.139Given the barriers to receiving explicit consent for such action from individuals who may be experiencing financial abuse and other forms of domestic and family violence, the committee considers it necessary for the Australian Government to consider mechanisms to enable the documentation of suspected abuse, including in instances where a customer has not granted explicit consent to such documentation.

2.140That the Australian Government consider how to best allow financial institutions to document and/or flag actual or suspected financial abuse against their customers when detected or reasonably suspected, including without explicit consent from customers. This may include amendments to the Privacy Act 1988.

2.141The Privacy Act sets out laws relating to consumer credit reporting and permits a wide range of creditors to report to or obtain information from credit reports. The Credit Reporting Code stipulates that an individual is allowed to request the removal of payment default information if the overdue payment ‘occurred because of the unavoidable consequences of circumstances beyond the individual’s control’, and cites examples such as a natural disaster or bank error in processing a direct debit or fraud.

2.142The committee notes that domestic abuse is included as a reason for allowing correction of a person’s credit record. However, the committee is concerned that this may not be specific enough and victim-survivors of financial abuse are not being appropriately represented in the current legislation. The committee sees significant benefits to amending the Credit Reporting Code to reflect capture financial abuse specifically, alongside the development of best practice guide by ARCA to assist credit reporting bodies and credit providers to ensure victim-survivors’ credit reports are accurate and that any negative credit reports arising from financial abuse are treated appropriately.

2.143The committee is encouraged to see that the Attorney General and Assistant Treasurer has established an independent review of Australia’s Credit Reporting Framework in the Privacy Act and the NCCP Act. The committee notes the review will examine the relationship of credit reporting with financial abuse and looks forward to seeing the report when published.

2.144That the Australian Government amend the Credit Reporting Code to specify that financial abuse is considered ‘circumstances beyond the individual’s control’; and that ARCA develop a best-practice financial abuse guideline for credit reporting bodies and credit providers.

2.145In circumstances involving financial abuse or coercive control, where a victim-survivor is not named on a mortgage but has been making contributions to mortgage payments, the committee notes with concern that situations arise where, post-separation, victim-survivors remain as the occupant of their home but are unable to obtain any information about or manage the mortgage loan. This impedes the ability of victim-survivors in such cases to track mortgage payments and arrears, and to manage the home loan account and alter loan arrangements to ensure they can remain in the home. As a result, victim-survivors are left in an ongoing state of uncertainty, often leading to loss of the home and damaged financial prospects. The committee heard strong concerns regarding the lack of specific provisions in privacy legislation and credit laws to address this situation.

2.146The committee heard evidence that the Privacy Act includes an exception in circumstances of a serious threat to life, health and safety, but that the exception does not refer explicitly to financial abuse. Inquiry participants argued that homelessness and family and domestic violence constitute serious threats to the life, health and safety of victim-survivors. In addition, elder abuse may also constitute a serious threat to the life, health and safety of an individual.

2.147The committee therefore considers that there are significant potential benefits to be gained from amending the Privacy Act to specify that circumstances of family violence, elder abuse and homelessness constitute a serious threat to the life, health and safety of an individual.

2.148That the Australian Government undertake appropriate action, including legislation, to clarify that circumstances of family violence, elder abuse and homelessness constitute a serious threat to the life, health and safety of an individual. This may include amendments to the Privacy Act 1988.

Insurance Contract Act 1984

2.149The IC Act provides the legal framework for general insurers, outlining the rights and obligations of insurance contracts. Evidence received by the committee has shown that IC Act and the Insurance Contracts Regulations 2017 (Cth) do not contain any specific provisions for consumers experiencing or impacted by family and domestic violence or financial abuse.

2.150The committee heard evidence that damage to property is a common feature of family and domestic violence and that victim-survivors can be left without insurance coverage when their property is intentionally damaged by a perpetrator leading to their policy being void or cancelled. The committee heard recommendations supporting the inclusion of ‘conduct of others’ clauses in insurance contracts, and this is further discussed in Chapter 3 of the report.

2.151The committee heard concerns regarding how perpetrators can make fundamental changes to a policy without the knowledge of the victim-survivor, and the committee has recommended above that the IC Act be amended to introduce a requirement that insurers must notify both policyholders of any request to cancel or modify the terms of the insurance policy. However, the committee notes that this requirement could be used by perpetrators to find out information about victim-survivors that should remain private in the interests of the safety or financial wellbeing of the victim-survivor.

2.152The committee therefore considers that insurers require more leeway to deem a joint insurance policy to be a composite policy in situations involving separated couples, and in situations of family and domestic violence where safe separation may not be a feasible option for a victim-survivor.

2.153That the Australian Government amend the Insurance Contracts Act 1984 to allow insurers to deem a joint insurance policy to be a composite policy in situations involving separation or divorce of co-insurers, and in situations where a victim-survivor’s claim would ordinarily be denied due to the conduct of their perpetrator of financial abuse or coercive control.

Superannuation

2.154The committee heard that superannuation is often the largest asset people own besides their home, and many inquiry participants submitted that the legislative and regulatory systems for superannuation are not adequately supporting victim-survivors of financial abuse.

2.155In particular, inquiry participants highlighted that SMSFs are vulnerable to manipulation by perpetrators due to their lower levels of regulatory oversight, which is based on the premise of individual self-protection. This gives rise to a greater risk that SMSFs can be used as vehicles for financial abuse.

2.156The committee strongly recommends a review into the intersection between financial abuse and the superannuation system, particularly in relation to SMSFs. Noting the very large amount of equity currently within SMSFs, the committee is concerned that SMSFs represent a significant pool of funds that are vulnerable and attractive to would-be perpetrators of financial abuse. The committee notes that financial abuse perpetrated through SMSFs has the potential for devastating impacts on victim-survivors’ financial and retirement prospects.

2.157Recognising the legitimate choice of Australians to have self-managed superannuation funds, the committee recommends that the Australian Government undertake a review of the intersection between financial abuse and the superannuation system, particularly in relation to self-managed superannuation funds; and ensure that the review is informed by the lived experience of victim-survivors.

2.158The SIS Act and regulations do not permit super funds to adequately consider financial abuse, or more broadly, family and domestic violence circumstances when determining beneficiaries and the split of death benefits when a member passes away. The committee heard that ‘legally, if an abuser is an eligible beneficiary, super funds must pay that death benefit out to that person’ and that there is currently no discretion for super funds to withhold payments in circumstances involving family and domestic violence and financial abuse.[131]

2.159The committee is greatly concerned that, by allowing perpetrators to claim death benefits, the current arrangements effectively allow a perpetrator to continue to commit financial abuse even after death of a victim-survivor, including in circumstances of domestic violence related suicide. The committee therefore believes that the SIS Act should be amended to ensure that the payment of death benefits arrangements account for circumstances of domestic and family violence including financial abuse.

2.160The committee considers that this issue is not isolated to the superannuation industry, and that a review into all financial products and services, as well as government services, would allow for greater protection of and support for victim-survivors.

2.161That the Superannuation Industry (Supervision) Act 1993 be amended to provide a mechanism so that a beneficiary who has perpetrated domestic or family abuse, including financial abuse, and domestic violence related suicide, against the superannuation account holder can be declared an invalid beneficiary of the account holder’s superannuation death benefits.

2.162That the Australian Government undertake a review of all financial products and services and government services to ensure that a perpetrator cannot financially benefit from the death of victim-survivors, including in circumstances of domestic violence related suicide.

Family Law

2.163The Family Law Act is the main legislation relating to divorce, separation, children, parenting arrangements, property and financial matters. The committee notes that, while the Family Law Act does include provisions for family violence, it does not specifically reference financial abuse.

2.164The committee heard serious concerns about the family law system being manipulated by perpetrators to continue their financial abuse of victim-survivors:

The final act of control that many abusers have when their victims leave is to financially ruin them for life, often by hiding and preventing access to any of the savings or liquid assets of the partnership and then drawing out any attempt at a settlement process, meaning that the victims can’t afford rent, can’t afford to pay the mortgage if required and, importantly, can’t even fund their own legal fees to ensure a fair settlement, exploiting failings in the court system and financial regulation.[109]

2.165The committee is encouraged by some of the measures proposed in the Family Law Amendment Bill 2024, which is currently before the Australian Senate, including amendments to the Family Law Act to specifically identify economic or financial abuse as an example of family violence. The committee notes the complexity of the family law system and therefore considers that, once enacted, the bill’s amendments should be reviewed after 12 months to consider their effectiveness specifically in relation to supporting victim-survivors of financial abuse.

2.166The committee received evidence regarding adverse Family Court outcomes, including those in which lawyers representing perpetrators actively enabled financial abuse of victim-survivors. The committee does not view the active enabling of financial abuse as legitimate representation of a client and believes that it is appropriate for state and territory Law Societies to undertake reviews of whether suborning financial abuse is adequately captured by applicable ethical and professional standards as behaviour capable of resulting in the deregistration of lawyers within that jurisdiction.

2.167That the Australian Government continue to monitor the effectiveness of the Family Law Act 1975 in recognising financial abuse.

2.168That state and territory law societies undertake a review of the ethical obligations of legal practitioners in relation to receipt of instructions which may have a financial abuse motive and available penalties for members who actively enable or facilitate financial abuse on behalf of their clients where there is no other reasonable basis underlying the instruction given by the client.

Enduring Powers of Attorney

2.169EPOAs are intended to promote the interests of the principal who grants the power of attorney to another person, by allowing the principal to nominate who will make future decisions on their behalf and to inform and guide what those decisions should be. However, the committee heard that, if EPOAs are misused or applied incorrectly, whether intentionally or unintentionally, EPOAs can be a significant and potent vehicle for facilitating and perpetrating financial abuse.

2.170The committee heard evidence that suggested the implementation of a national EPOA register would support financial institutions to identify elder financial abuse. However, other submitters considered that pursuing greater consistency between state and territory EPOA schemes would be a more practical and efficient way to create nationally consistency in EPOAs schemes, which will reduce the potential for their misuse and thus better protect victim-survivors. Additionally, the committee notes the recommendation of the Standing Council of Attorneys-General that the focus of reform in relation to EPOAs should be also to implement education and awareness raising programs aimed at reducing elder abuse occurring through EPOAs. The committee considers that the harmonisation of state and territory schemes along with the resourcing of education and awareness raising should be pursued in the first instance, with the establishment of a national scheme to be considered in the event that inconsistencies between state and territory schemes prove to be intractable.

2.171That the Australian Government implement measures to achieve greater consistency in state and territory EPOA laws applying best practice to prevent financial abuse; and to promote education and awareness programs aimed at reducing elder abuse occurring through misuse of EPOAs.

Footnotes

[1]Australian Securities and Investments Commission (ASIC), Submission 48, p. 9.

[2]Centre for Women’s Economic Safety (CWES), Submission 82, p. 15.

[3]Diva Advocacy Solutions, Submission 19, p. 14.

[4]Financial Rights Legal Centre, National Credit Act, 23 February 2023, www.financialrights.org.au/factsheet/national-credit-act/ (accessed 17 September 2024).

[5]Financial Rights Legal Centra, Submission 112, p. 27.

[6]WEstjustice Submission 113, p. 6.

[7]Financial Rights Legal Centre, National Credit Act, 23 February 2023, www.financialrights.org.au/factsheet/national-credit-act/ (accessed 17 September 2024).

[8]ASIC, Regulatory Guide 209, Credit licensing: Responsible lending conduct, December 2019, p. 28.

[9]Australian Retail Credit Association (ARCA), Submission 53, p. 7.

[10]Economic Abuse Reference Group (EARG), Submission 108, p. 19.

[11]National Legal Aid, Submission 78, p. [17].

[12]Case study provided by National Legal Aid, Submission 78, p. [18].

[13]National Legal Aid, Submission 78, p. [18].

[14]WEstjustice, Submission 113, p. 7.

[15]WEstjustice, Submission 113, p. 7.

[16]Australian Banking Association (ABA), Submission 99, p. 5.

[17]ARCA, Submission 53, p. 8.

[18]ARCA, Submission 53, p. 8.

[19]Women’s Legal Service Victoria, Submission 131, p. 22.

[20]Case study provided by the Financial Rights Legal Centre, Submission 112, p. 8.

[21]ARCA, Submission 53, p. 8.

[22]Women’s Legal Service Victoria, Submission 131, p. 22.

[23]ARCA, Submission 53, p. 8.

[24]ASIC, National Credit Code, https://asic.gov.au/regulatory-resources/credit/credit-general-conduct-obligations/national-credit-code/ (accessed 19 September 2024).

[25]ASIC, National Credit Code, https://asic.gov.au/regulatory-resources/credit/credit-general-conduct-obligations/national-credit-code/ (accessed 19 September 2024).

[26]Hopgood Lawyers, Submission 49, p. 7.

[27]Commonwealth Bank of Australia (CBA), Answers to questions on notice, 8 July 2024 and 20 August 2024 (received 22 August 2024).

[28]ANZ, Submission 95, p. 6.

[29]ANZ, Submission 95, p. 6; Westpac Group, Answers to questions on notice, 9 and 19 July 2024 (received 16 August 2024); and CBA, Submission 69, p. 10.

[30]CBA, Submission 69, p. 10.

[31]CWES, Submission 82, p. 16.

[32]CWES, Submission 82, p. 16.

[33]Attorney-General’s Department (AGD), Submission 102, p. 7.

[34]Office of the Australian Information Commissioner, Privacy (Credit Reporting) Code 2014 (Version2.3),www.oaic.gov.au/privacy/privacy-registers/privacy-codes/privacy-credit-reporting-code-2014-version-2.3 (accessed 23 September 2024).

[35]NSW Aging and Disability Commission, Submission 81, p. 7.

[36]AGD, Submission 102, p. 8.

[37]AGD, Submission 102, pp 8–9.

[38]Westpac, Response to questions seeking further information on processes to identify, respond to and report financial abuse, received 5 July 2024, p. 4.

[39]ABA, Answers to questions on notice, 8 July 2024 (received 12 August 2024), p. 6.

[40]ABA, Submission 99, p. 6

[41]Case study provided by the ABA, Submission 99, p. 7.

[42]WEstjustice, Submission 113, p. 15.

[43]AGD Submission 102, p. 8.

[44]Australian Government, Government Response, Privacy Act Review, September 2023, p. 6.

[45]Flequity Ventures, Submission 88, p. 8.

[46]Westpac, Response to questions seeking further information on processes to identify, respond to and report financial abuse, received 5 July 2024, p. 5.

[47]Office of the Australian Information Commissioner, Privacy (Credit Reporting) Code 2014 (Version2.3),www.oaic.gov.au/privacy/privacy-registers/privacy-codes/privacy-credit-reporting-code-2014-version-2.3 (accessed 23 September 2024).

[48]Economic Abuse Reference Group, Credit Reporting and Economic Abuse, May 2022, p. 7

[49]Economic Abuse Reference Group, Credit Reporting and Economic Abuse, May 2022, p. 7

[50]EARG, Credit Reporting and Economic Abuse, May 2022, p. 10.

[51]EARG, Submission 108, p. 27.

[52]Women’s Legal Service Victoria, Submission 131, pp 22–23.

[53]EARG, Submission 108, p. 27.

[54]National Legal Aid, Submission 78, p. 4.

[55]AGD, Submission 102, p. 11.

[56]WEstjustice, Submission 113, pp 13–14.

[57]WEstjustice, Submission 113, p. 13.

[58]Mr Adrian Ahern, Group Customer Advocate, Westpac Banking Corporation, Committee Hansard, 9 July 2024, pp 6–7.

[59]WEstjustice, Submission 113, p. 13.

[60]Ms Dacia Abela, Program Manager, Economic Justice Program, WEstjustice, Committee Hansard, 8July 2024, p. 22.

[61]EARG, Submission 108, p. 28.

[62]ABA, Answers to questions on notice, 8 July 2024 (received 12 August 2024).

[63]Name Withheld, Submission 17, pp [1–2].

[64]Diva Advocacy Solutions, Submission 19, p. 22.

[65]ASIC, Submission 48, p. 9.

[66]Economic Abuse Reference Group Western Australia, Answers to questions on notice, 10 July 2024 (received 7 Augus 2024), p. [5].

[67]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 28 June 2024, p. 69.

[68]Ms Catherine Fitzpatrick, Designed to Disrupt: Reimagining general insurance products to improve financial safety (CWES Discussion Paper 2), 2024, p. 10.

[69]Financial Rights Legal Centre, Submission 112, p. 54.

[70]National Legal Aid, Submission 78, p. [17].

[71]National Legal Aid, Submission 78, p. [17].

[72]Ms Catherine Fitzpatrick, Founder and Director, Flequity Ventures, Committee Hansard, 28June2024, pp 26–27.

[73]Wotton and Kearney, Submission 80, p. 3.

[74]Ms Catherine Fitzpatrick, Founder and Director, Flequity Ventures, Committee Hansard, 28June2024, p. 28.

[75]Case study provided by CWES, Submission 82, p. 19.

[76]Wotton and Kearney, Submission 80, p. 3.

[77]Wotton and Kearney, Submission 80, p. 2; CWES, Submission 82, p.19.

[78]Wotton and Kearney, Submission 80, p. 3.

[79]Financial Rights Legal Centre, Submission 112, p. 56.

[80]CWES, Submission 82, p. 22.

[81]Superannuation Industry (Supervision) Act 1993 (SIS Act), s. 3.

[82]Economic Abuse Refence Group, Submission 108, p. 40; Ms Julie Adams, Submission 104, pp 1–5; Super Consumers Australia, Submission 97, p. 10.

[83]Public Trustees of Australia, Submission 32, p. 8.

[84]Future Group, Submission 110, p. [7].

[85]Future Group, Submission 110, p. [7].

[86]Future Group, Submission 110, p. [7].

[87]Financial Wellbeing Collective, Submission 39, p. 5.

[88]Ms Christina Hobbs, General Manager, Advocacy and Impact, Future Group, Committee Hansard, 13 September 2024, p. 52.

[89]Financial Wellbeing Collective, Submission 39, p. 5.

[90]Case study provided by Future Group, Submission 110, [p. 7].

[91]Future Group, Submission 110, [p. 18].

[92]Super Consumers Australia, Submission 97, p. 10.

[93]Super Consumers Australia, Submission 97, p. 6.

[94]Super Consumers Australia, Submission 97, p. 6.

[95]Super Consumers Australia, Submission 97, p. 7.

[96]Super Consumers Australia, Submission 97, p. 7.

[97]Super Consumers Australia, Submission 97, p. 8.

[98]Case study provided by Super Consumers Australia, Submission 97, p. 9.

[99]Ms Julie Adams, Submission 104, p. 3.

[100]Australian Financial Complaints Authority (AFCA), Submission 132, p. 23.

[101]AFCA, Submission 132, p. 22.

[102]Future Group, Submission 110, p. 7.

[103]Ms Fiona Galbraith, Director, Policy, Association of Superannuation Funds of Australia, Committee Hansard, 8 August 2024, pp 59–60.

[104]Ms Misha Schubert, CEO, Super Members Council, Committee Hansard, 8 August 2024, p. 58.

[105]Super Consumers Australia, Submission 97, p. 4.

[106]Ms Fiona Galbraith, Director, Policy, Association of Superannuation Funds of Australia, Committee Hansard, 8 August 2024, p. 60.

[107]NSW Government, Factsheet: Family Law Overview, last updated 13 February 2024 (accessed 30September 2024)

[108]Federal Circuit and Family Court of Australia, Family violence: Overview, https://www.fcfcoa.gov.au/fl/fv/overview (accessed 30 September 2024).

[109]Ms Christina Hobbs, General Manager, Advocacy and Impact, Future Group, Committee Hansard, 13 September 2024, p. 52.

[110]CWES, Submission 82, p. 22.

[111]Case study provided by CWES, Submission 82, p. 23.

[112]CWES Submission 82, p. 23.

[113]EARG, Submission 108, p. 42.

[114]EARG, Submission 108, p. 42.

[115]EARG, Submission 108, p. 42.

[116]EARG, Submission 108, p. 43.

[117]AGD, Answers to questions on notice, 15 August 2024 (received 13 September 2024), p. 2.

[118]AGD, Answers to questions on notice, 15 August 2024 (received 13 September 2024), pp 2–3.

[119]AGD, Answers to questions on notice, 15 August 2024 (received 13 September 2024), p. 3.

[120]AGD, Answers to questions on notice, 15 August 2024 (received 13 September 2024), p. 3.

[121]AGD, Answers to questions on notice, 15 August 2024 (received 13 September 2024), p. 3.

[122]AGD, Submission 102, p. 5.

[123]Australian Human Rights Commission, Submission 105, p. 11.

[124]Australian Human Rights Commission, Submission 105, p. 11.

[125]Australian Human Rights Commission, Submission 105, p.12; Dementia Australia, Submission 31, p. 5; Law Council of Australia, Submission 127, p. 12.

[126]Dementia Australia, Submission 31, p. 5; Australian Human Rights Commission, Submission 105, p.12.

[127]Westpac, Response to questions seeking further information on processes to identify, respond to and report financial abuse, received 5 July 2024, p. 5.

[128]Law Council of Australia, Submission 127, p. 12.

[129]AGD, Submission 102, p. 5.

[130]Australian Human Rights Commission, Submission 105, p. 13.

[131]Ms Misha Schubert, CEO, Super Members Council, Committee Hansard, 8 August 2024, p. 58.

[109]Ms Christina Hobbs, General Manager, Advocacy and Impact, Future Group, Committee Hansard, 13 September 2024, p. 52.