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Divorce and separationDomestic violenceFinancial issues and settlement

Financial abuse in family law

By May 24, 2018October 26th, 2021No Comments

The behaviour it describes is not new, but the terminology of “financial abuse” is a relatively recent addition to the lexicon of family violence.  Economic or financial abuse are terms that were added in 2012 to the definition of “family violence” in the Family Law Act 1975.

In practice, the term refers to when someone is coercive, deceptive or unreasonably controls another person’s finances without their consent, for example threatening to withhold monies needed for living expenses, or coercing someone to relinquish assets or income.

Many experts believe the instances of financial abuse are on the rise, but it’s not clear whether the problem is getting worse or whether it’s just that more people are reporting the problem. 

According to RMIT research last year, two million Australians are predicted to experience economic abuse in their lifetime.  In terms of gender differences, the lifetime prevalence of financial abuse for women is 15.7% compared to 7.1% for men.

The higher rate for women is often explained as being due to women having being disadvantaged by a lack of financial literacy. This education gap is argued to be the result of traditional gender roles within marriages or where women have been the primary childcarer for prolonged periods while their partner earnt an income and thereby controlled the finances.

One thing seems clear—the family court system has not caught up with the need to take potential financial abuse into account in proceedings. While recognised and defined, economic abuse is not considered when courts divide assets in property settlements. As it is, the Family Law Act  “makes no specific provisions for dealing with financial abuse as a factor for determining a just and equitable property settlement”.

In the milieu of family law reform which Australia currently finds itself in, there’s a push to confront that issue. But practitioners say unfortunately, “unless financial abuse is accompanied by an associated criminal act, such as threats or acts of violence or forgery of documents for example, it is not a crime that the courts will recognise.” It’s also often more difficult to prove than physical violence.

It remains to be seen how successful submissions to the Australian Law Commission’s review are, in having “financial abuse” considered a form of family violence affecting property settlements.

The fact is, experts say that financial abuse is rarely seen on its own–it usually comes as part of a package of abuse. Sadly, for those who are already suffering family violence, economic abuse only worsens the situation as it “strips the victim of the resources to leave the relationship…When they do leave, they can spend a lifetime rebuilding the financial independence and financial decision-making confidence.”

The federal government’s anti-domestic violence agenda in recent years has made great strides in the family violence sector, but more needs to be done to recognise economic abuse. This could have the practical effect of, for example, compelling financial institutions to report abusive financial acts committed against parties.

Starting court proceedings quickly is important for people in circumstances of economic abuse to prevent the situation worsening as assets are stripped or cash is spent.  Practitioners point out that an urgent application can be made in the family court to get an injunction preventing someone moving assets or spending mutual funds. Such applications may see parties before the courts in weeks, as opposed to the three months it might take to have a non-urgent proceeding reach its first hearing in the family court.

Read more: Financy

You might like to read the information on economic abuse in the National Domestic and Family Violence Bench Book which is used to train judicial officers.

And our blog on financial fraud in divorce might be of interest too.

Do you need assistance with a property settlement or other family law matter? Please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Legal Services on (02) 6223 2400.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Legal Services.


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