Guest author: Hari Bhambra, Global Head of Compliance Solutions at the Apex Group
The challenges that women have faced in financial independence are evident in the almost stagnant evolution of laws. It was not until 1975 in the UK that a woman was able to open her own bank account without requiring the permission of her spouse and until very recently, women were not able to take their own tax related decisions.
Why do women need safeguarding?
Financial and economic abuse over women is finally being recognised as something which is no longer acceptable - unfortunately ‘no longer’ acceptable, as opposed to ‘not’ acceptable. In certain industries, sectors, cultures and systems the control over finances and financial decisions remains in the hands of men
4.2 million women report economic abuse
1.3 million women are prevented from having a bank account
1 in 6 women in the UK have suffered economic abuse by a partner
Economic abuse is rarely an isolated event, it is usually committed alongside wider psychological or physical abuse
Financial control and the cycle of abuse
When access to financial accounts, joint accounts, financial records is controlled by one partner, financial services can be used in abusive relationships to further enable one of the partners (statistically usually the woman) to be exploited, as illustrated in the Economic Abuse Wheel, which shows how a partner may get financial control. If the male partner is the primary or sole point of contact with a financial institution, they can control economic decisions and abuse this power.
Women may find themselves without access to their own funds, no financial track record and difficulty opening new facilities, accounts or credit cards because their partners exercised financial control, directly or indirectly.
This may leave a woman unable to have the confidence to understand financial matters, no access to money to escape from abuse, and further challenges when they seek independence due to lack of a financial track record to be able to open up services like a bank account.
Women seeking access to financial services need to feel that their financial services provider understands their needs and can provide them the same level of service as their male counterparts, delivered in a safe and confidential environment. This can be difficult when the sales teams of many institutions are predominantly male.
In certain places, women will feel unable to approach a male salesperson, and this limits the ability of women to be able to reach out and access financial services and products. This is particularly prevalent in places and cultures of a patriarchal nature, where male guardians (spouses, fathers, or brothers) many need to 'allow' permission or 'no-objection' for women to access financial services – even today.
Financial access for women
The UK FCA (Financial Conduct Authority) has issued guidance on the fair treatment of vulnerable customers which requires financial institutions to better understand vulnerability risk – including domestic abuse – across their client base.
Perhaps there is finally a changing shift and attitude that it is no longer acceptable to disregard, dismiss or undermine what may be happening to a woman just because it is occurring in a ‘domestic setting’. Economic abuse is still abuse, and financial institutions carry a responsibility to safeguard vulnerable consumers.
However, legislation can still have unintended consequences for victims of economic abuse. Today, to access financial services, Know Your Customer (‘KYC’) data is required, which is to confirm, among other things, proof of identity and address and financial information, which should be in the applicant’s name, readily accessible and up-to date.
Whilst Know Your Customer rules are in place to verify the identity and allow for risk assessments of new customers of financial services, the way in which these procedures are implemented may be preventing women from accessing the services they require, particularly if they have not previously had financial control.
Women who have not previously had their own accounts or held only joint accounts where the contact point and financial records were not in her sole name may not always meet the relevant documentation requirements of some financial institutions. Because of this, they may not be able to fully access financial services independently, nor even have access to these records and documents by required to access financial services which may be handled by their partners.
How can we better prevent economic abuse?
Concrete steps need to be taken in order to reduce the unacceptably high numbers of women subject to economic abuse. So, what can be done institutionally?
1. We need to emphasise the right for women to control their own financial decisions and remain financially independent if they wish to.
2. We need to ensure women are given information so that they can ask the appropriate questions to financial institutions in terms of how decisions can be made over her own finances, and who she can turn to in the financial institution to grant her that access, particularly so in joint accounts held with partners and spouses.
3. For women who have limited independent financial track record, financial institutions should take a risk-based approach where permitted in regulation, rather than outward denial without taking her own unique circumstances into account.
4. Women in joint account scenarios should be treated independently by financial services institutions in terms of ongoing regulatory due diligence requirements. Financial institutions should not assume the data they hold for account opening purposes remain up to date and accurate, and must take the time to approach each account holder individually and confidentially as part of regulatory ongoing due diligence purposes. This may allow a woman to reach out for help if she wishes to (re)gain some level of financial independence.
It has never been more important than now to ensure that regulations around Know Your Customer and vulnerability codes are used to safeguard women through the financial system and to prevent the financial system being used to further enable abusive and controlling practices. Financial service institutions have an important role to play.
About Hari Bhambra, our guest author for this article
Hari Bhambra is Global Head of Compliance Solutions at global financial services provider, Apex Group. Hari has over 20 years’ experience in financial services compliance and regulation, including Goldman Sachs and being part of the development team of two regulators (UK FSA) (DIFC DFSA), adviser to other regulators, including on the systemic implications of integrating Islamic finance into secular markets and being part of the development and launch of a financial centre, the DIFC.
Hari oversees Apex’s Global Compliance solutions business providing external compliance solutions to entities and funds globally.
Sources and information
1. UK Finance- Financial Abuse Code: https://www.ukfinance.org.uk/financial-abuse-code-practice
2. Statistics - https://www.ukfinance.org.uk/news-and-insight/blogs/taking-control-economic-abuse-six-moments-matter-banks-support-people
3. Economic Abuse - https://www.womensaid.org.uk/wp-content/uploads/2019/12/Economics-of-Abuse-Report-2019.pdf
4. UK FCA Fair Treatment of Vulnerable Customers- https://www.fca.org.uk/news/press-releases/fca-launches-guidance-firms-fair-treatment-vulnerable-customers
5. Section 29 Sex Discrimination Act- https://www.legislation.gov.uk/ukpga/1975/65/enacted
6. https://survivingeconomicabuse.org/what-is-economic-abuse/
7. https://www.forbes.com/sites/forbesnonprofitcouncil/2021/08/09/driving-social-impact-by-putting-the-s-in-esg/?sh=52c384774d84