Bank to Suspend, Cancel Accounts of Customers Engaged in ‘Financial Abuse’

A man walks past a branch of the National Australia Bank (NAB) in Melbourne, Australia, on May 6, 2021. William West/AFP via Getty Images

The National Australia Bank (NAB) has assured customers that new rules that allow it to “cut off” customers identified as perpetrators of financial abuse will not be open to misuse.

On June 26, NAB announced it would be updating its terms and conditions saying the bank will suspend, cancel, or deny access to savings and transaction accounts if a person is found to have engaged in financial abuse.

Yet there are concerns the conditions could be taken advantage of by individuals making false or malicious claims against partners, family members, or other individuals.

NAB’s head of Customer Vulnerability, Michael Chambers, said the bank would conduct detailed investigations into any claim via a specialist team trained to make the necessary enquiries.

“As part of the detailed investigation, we will look at transaction data, speak with the recipient of the suspected financial abuse and speak with the alleged perpetrator before we take any action,” Mr. Chambers told The Epoch Times.

“If we believe financial abuse is occurring, the perpetrator will receive a warning letter, and if their behaviour persists, we will take the appropriate action to alter, suspend or terminate services to them.”

Mr. Chambers noted that the bank had a duty of care to its vulnerable customers, who may be older, have a disability, illness or cognitive impairment, or are experiencing family violence or domestic abuse.

“Financial abuse takes many forms,” he said. “It can occur in family-based relationships by forcing a family member to be a guarantor on a secured loan or pressuring family members to lend money without intention to pay it back.”

“In caregiving scenarios, where a relative or carer has access to another person’s funds and misuses them for their own purposes; or as a form of coercive control to prevent a victim-survivor of domestic abuse from achieving financial independence.

“This change aims to stop financial abuse from occurring, be it related to family violence, elder financial abuse or domestic abuse,” he said.

The new rules are set to come into effect in November 2023 and have been formulated with help from the paper ‘Designed to Disrupt,’ authored by Catherine Fitzpatrick, and supported by the Centre for Women’s Economic Safety.

The NAB crackdown on financial abuse follows the bank’s decision in January to block abusive messages sent via payment transactions.

Currently, the bank says it has blocked more than 200,000 abusive transactions using technology that searches for keywords and phrases.

NAB Following in the Footsteps of the CBA

The move by the NAB brings it in line with the Commonwealth Bank of Australia (CBA), which since 2020 has been working on countering financial abuse under its Next Chapter program.

According to the bank, CommBank Next Chapter is a bank-wide commitment to help end financial abuse and support people on their road to long-term financial independence.

Launched in 2020, the scheme notes that in a survey commissioned by the CBA in 2020, of almost 2,000 Australians aged over 65, 28 percent have said that they have experienced financial abuse or know someone who has.

Of those experiencing financial abuse, 52 percent said they thought they could deal with the financial abuse on their own.

Research (pdf) conducted by Deloitte and commissioned by CBA estimates that in 2020 the direct cost of financial abuse to victims was $5.7 billion (US$3.89 billion), with an estimated additional cost to the broader Australian economy of $5.2 billion.

Opinion Split on New Rules

The decision by the NAB and the CBA has received a mixed response, with advocates from the Centre for Women’s Economic Safety (CWES) saying the move is a significant step in making it clear domestic abuse will not be tolerated.

Rebecca Glenn, CEO of CWES, said (pdf) the response puts perpetrators “on notice” that institutions are going to make it harder for them to use financial abuse as a tactic of coercive control.

“Few other businesses are better placed to protect women against financial abuse and its devastating health and economic impacts for them and their children,” she said in a statement.

“I’m delighted to see the Commonwealth Bank and NAB build on a range of other initiatives they’ve put in place to support people experiencing financial abuse and domestic and family violence.”

However, Bettina Arndt from the Men’s Rights Agency has criticised the move.

She is concerned that the bank’s investigators may be prone to bias and will focus solely on males as perpetrators.

“Psychologists at the University of Central Lancashire, who carried out the major research available on male victims of coercive control, report financial abuse was a major issue for many of these men,” wrote in a recent blog post.

“‘Half of the male victims had their earnings controlled as a pattern of abuse which in some cases led to men not being able to purchase food or clothing. Men were also expected to take on the burden of all household finances as almost two-thirds of the female perpetrators refused to contribute to household bills and over half refused to work even if able to,’” Ms. Arndt wrote.