Financial Ombudsman Service publishes approach to economic and domestic abuse

The Financial Ombudsman Service (FOS) has published a web page on its approach to complaints involving economic and domestic abuse.  The Domestic Abuse Act makes economic abuse part of the statutory definition of domestic abuse.  FOS explains that economic abuse is where an individual's access to resources such as money is limited or controlled by the perpetrator.  Economic abuse can also include exploitation and breaches of trust such as spending someone else's money or requiring them to take out debts.  The perpetrator is usually well known to the victim, eg a partner or family member.

FOS lists examples of economic abuse claims brought to it.  These may involve the victim being pressured into taking out or guaranteeing a loan, or being pressured into signing over policies or investments to someone else.  It flags that the FCA's guidance on the fair treatment of vulnerable customers may be relevant.  

FOS highlights the need for firms to deal with economic abuse complaints with sensitivity, eg not requiring the customer to repeatedly tell their story.  Where a complaint involving economic abuse is brought to FOS, FOS will consider what the firm knew our ought reasonably to have known, including whether there were any triggers for further action or investigation.  One of the case studies involving complaints upheld by FOS includes a complainant being forced into guaranteeing a loan by a family member who was verbally and physically abusive.  The agreement for the guarantor had been sent to the borrower's own e-mail address.  A recording of customer phone calls revealed that the guarantor had hesitated over key questions, and that there was someone in the background telling her what to say.  FOS says that this should have triggered further investigation by the lender.

Our thoughts

Pension providers should ensure they have processes in place to trigger further investigation if there are any warning signs of possible economic abuse, for example that a member is being coerced into withdrawing large amounts of cash from a scheme.