BNZ and other lenders are waiving debts incurred in abusive relationships

Tuesday, 30 November 2021

Good Shepherd chairwoman Diana Crossan quizzes Fincap policy adviser Jake Lilley and BNZ customer assist general manager Martin King about the policy of lenders forgiving the debt of women coerced into taking on loans by abusive partners.

Bank of New Zealand and some other lenders have waived the debts of victims of economic abuse.

Economic abuse, and the economic harm it causes, is, as AUT University senior lecturer Ayesha Scott called it, the “weaponising of money” by an intimate partner.

Victim-survivor advocates said economic abuse could include a variety of controlling methods. It often included male partners, or relatives, of a woman coercing her to take out loans in her name for their benefit.

Women, and less commonly men, who suffered economic abuse often found the consequences of that abuse would linger long after they escape the relationship as they struggled with damaged credit scores and debts that they were left to repay alone, advocates said.

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But economic harm experts speaking at the Economic Harm Awareness Day webinar on Friday said some lenders were moved by stories of economic abuse to simply wipe victim-survivors’ debts.

Jake Lilley, a policy officer at Fincap, a financial mentoring agency, said: “The best examples I have seen of a business finding out a debt is the result of economic harm is to just waive the debt.”

Waivers allowed victims of economic abuse and harm to get out of “impossible situations”, where they had debts they could not hope to repay without significant hardship, he said.

“We advocate for debt waivers as a way for people to move forward,” Lilley said.

“We have done it,” said Martin King, BNZ’s customer assist general manager.

It was only used in certain complex cases and came after the bank had worked with financial mentors and other victim-survivor advocates, King said.

Few banks, power providers or other large companies had specific family violence policies, the webinar was told.

Instead, people who had suffered economic abuse from a partner or family member were generally dealt with under traditional “hardship” processes, which all lenders and power companies must by law have.

Lilley said that when creating economic abuse policies, companies had to understand how traumatised people could be. That could involve companies accepting they had to accept lower levels of proof than they might in other hardship cases.

“Take people at their word about their experience, so they don’t have to repeat over and over again an awful experience in their life and can move on,” he said.

Debt waivers had been done when working along with a customer’s support agencies, including Good Shepherd, which hosted the seminar.

Internationally, debtor advocate groups including Good Shepherd have been working to lift the profile of economic abuse and economic harm.

Economic abuse is a little-recognised form of family violence, says Nicola Eccleton, the manager for social inclusion at Good Shepherd, and economic harm is the result of that abuse.

A recent study from the University of Auckland suggested it was on the rise, possibly because people who abuse their partners might see it as a low-risk abuse option, as it was seldom prosecuted or recognised.