October 2022 saw the annual Corbett Le Quesne’s International Family Law Conference. This year, the theme of the conference was financial abuse and coercive control in high net worth financial claims on divorces, writes Filomena Sterkaj, senior associate at Stowe Family Law.
A ‘hot’ topic in the media, economic abuse is a deeply complex and troubling area that needs spotlighting.
Financial abuse and coercive control can occur across the board, particularly in the current cost-of-living crisis, as money pressures are likely to increase or worsen the abuse already happening.
The crisis also brings additional concerns for survivors trying to leave an abusive relationship. Lack of access to money can be a significant barrier to a person’s ability to flee their abuser or seek specialist support.
Within high-net-worth divorces, this type of abuse can be especially pernicious, as there is far more scope to use money and financial resources as a means of control. Key disputes in these types of divorces often have assets at the centre of the battleground – property, jewellery, art, cars, and many other high-cost pieces. These are colloquially known as ‘handbag divorces’.
Survivors of economic abuse often find that their experience has long-term implications for their mental and financial health. This type of domestic abuse can be life-altering, but it was not recognised in law until recently.
Law
Changes brought in by the Domestic Abuse Act of 2021 addressed economic abuse. Economic abuse means any behaviour that has a substantial adverse effect on a person’s ability to acquire, use or maintain money or other property, and/or obtain goods or services.
The act changed the definition of domestic abuse and expanded it to include financial abuse. It emphasises, now, that domestic abuse is not just physical, but extends to physical or sexual abuse, violent or threatening behaviour, controlling or coercive behaviour, economic abuse, psychological, emotional or other abuse; and it does not matter whether the behaviour consists of a single incident or a course of conduct.
It also amended the controlling or coercive behaviour offence so that it includes post-separation abuse, which is a vital amendment for those who suffer from coercive control after their divorce.
Economic abuse, like other forms of abuse, can take on various guises and is often difficult to identify. It can go unnoticed for a considerable time, and survivors often do not realise they are being financially abused until the relationship ends. It frequently interlinks with other forms of abuse, including physical, sexual and emotional abuse, and it is estimated that 95% of reported domestic abuse involves economic abuse.
Coercive control
Moreover, financial abuse and coercive control are often inextricably connected. Coercive control is defined as one individual or group exerting control over another. This can include ensuring they are disconnected from any sources of support. Often the abuser will isolate their victim from their friends and family, as well as more official avenues of support. They will exploit the victim’s resources or capacities for their own gain, and deprive them of any means of escape or independence.
Within high-net-worth relationships and divorces, a perpetrator of economic abuse will ensure they have access to and sole control over the finances of the couple or family, and restrict, if not remove entirely, the victim’s ability to access independent finances or family money.
Not only this, but the survivor may also be deprived of their ability to access employment, training and education, not to mention basic living essentials such as food and clothing.
It has been reported that family courts are not properly equipped to deal with divorces involving economic abuse and coercive control, and can in some ways be the facilitators of further abuse. Much of this is due to the need for a ‘fair trial’ which puts restrictions in place, extends the process and allows abusive behaviour to continue unchecked for too long.
Victims of economic abuse are also at further disadvantage, as the perpetrator often removes any access to funds, meaning paying for legal representation is impossible. For post-separation couples, the financial remedy process does not always ensure a fair outcome for the survivor, especially if they already have limited knowledge of the family finances.
Family lawyers often see the abuser purposefully making the divorce proceedings and post-separation process very difficult, using the legal system for their own gain. A key example is failing to disclose or hiding marital assets, which further extends the stressful process and increases legal fees.
Although it may seem unusual for a high-net-worth individual to not have access to money, subtle but incredibly harmful coercion and control can leave the victim entirely dependent on the perpetrator. If control continues after divorce, the survivor may return to the abuser, for lack of any other option.
Prime position
Financial advisers may be in a prime position to notice evidence of control or exploitation, because they often have insight into a couple’s finances. If this is an issue, they can offer advice and signpost specialist support.
More certainly needs to be done to protect survivors of economic abuse and coercive control. A good first step, however, is recognising the signs and understanding the complexities of financial abuse within high-net-worth divorces.
This article was written for International Adviser by Filomena Sterkaj, senior associate at Stowe Family Law.
