Financial exclusion ‘punishes prisoners twice for their crimes’

Sunday, 9 July 2023

Prisoners’ money lives are being neglected, and that has to change, the Paying the Price report says.

People are leaving prison without bank accounts, making it harder for them to reintegrate into society, says a report whose author is calling for an overhaul of pre-release systems at Corrections.

The Paying the Price report by Victoria Stace from Victoria University of Wellington Te Herenga Waka, indicates Corrections Ara Poutama Aotearoa is failing many prisoners, who too often find their money lives falling into complete disarray while in prison.

Countries like the United Kingdom have well-developed programmes to reduce financial exclusion of prisoners, and increase their chances of going straight on release.

But Stace found “staffing issues” in New Zealand prisons were one of the reasons existing opportunities for prisoners to open accounts before being set free were not being taken.

She is calling for people entering jail to be taken by their Corrections case managers through a “financial checklist”, in part to tell banks and creditors to put their accounts and debts on hold.

Too often fees mounedt, penalty interest accumulated, and accounts were closed while people were in jail, Stace found.

Without access to private phones, or the internet, which are denied to prisoners to stop them orchestrating crime from behind bars, people in jail often saw their financial lives fall into complete disarray.

“It is not uncommon for the prisoner to find that after a period of incarceration, they are heavily in debt and their bank account has been closed,” Stace said.

In Australia, this has been dubbed a “double punishment”. In the United Kingdom, a limited study found a link between people having a bank account on release, and their chances of staying out of prison.

Exactly how often people leave jail without having a personal bank account is not known. Stace said one kaimahi from the kaupapa Māori organisation Te Pā reintegration service told her people he helped reintegrate generally had no personal account on release.

Victoria Stace says people often come out of prison heavily in debt.

People trying to open bank accounts after release ran into problems. Those in temporary accomodation struggled to provide proof of address.

While in prison, people have an address, and have been identified by a government department, Stace said.

But after release, it could take weeks to get the ID documents people needed to convince banks to open accounts.

Stace called for change at Corrections, and more funding, to make sure case managers had the processes, time and money to help prisoners manage their money lives.

But banks had to play their part and Stace wanted the Government to use its influence to see them commit to keeping prisoners banked.

The New Zealand Banking Association Te Rangipū Pēke said banks would be likely to support government initiatives as long as they didn’t compromise banks’ anti-money laundering obligations.

“These kinds of initiatives need a whole of government approach,” the association said.

Only Westpac and Kiwibank are considered prisoner-friendly banks by financial mentors, but only a small number of accounts have been opened under Westpac’s New Start programme, which includes a special 0800 number on which prisoners and ex-prisoners could talk to specially-trained staff.

Corrections Minister Kelvin Davis believes every prisoner has a chance to be helped to get a bank account before leaving prison, but a study says that may not be happening.

Paying the Price is the second damning report on the banking struggles of marginalised people, following a report issued in April, which found prisoners were among those most likely to lack a bank account.

Corrections Minister Kelvin Davis said he expected Corrections to facilitate bank accounts for any prisoner who wanted one.

Financial mentors are frustrated at how hard it is for people who have been released from prison to get bank accounts.

“Questions around how that is implemented should be directed to them [Corrections].”

Leigh Marsh, national commissioner of Corrections, said: “We recognise that not having a bank account or official identification card can make it more difficult for people being released from prison to successfully reintegrate into the community.”

It has been working with Hospitality NZ to give everyone in prison get the chance to apply for a Kiwi Access Card before they left prison, as ID.

“In the past three weeks at Otago Corrections Facility, 35 prisoners have applied for and received an ID,” Marsh said.

David Verry is a budget mentor, who does a lot of volunteer work helping prisoners.

Corrections had also been working with Westpac, he said, but to date that had only seen 124 prisoners get bank accounts.

At the end of March, the prison population was 8376.

Progress seems slow to financial mentor David Verry despite the problem being recognised since 2016, when the Salvation Army published a report on prisoners’ banking struggles.

Verry has been volunteering as a financial mentor in prisons for many years, and believes over-worked, and often inexperienced, case managers did not grasp the problem.

“Often I talk to prisoners, and ask who their case manager is, and the answer is often, ‘I don’t know’. You need the case managers to step up,” he said.

There needed to be a plan for every prisoner to get their money life sorted before they left prison, he said.

“The only people who can do that are case managers, and I am not sure they have the time to make it happen,” Verry said.

Stace found financial mentors felt banks saw prisoners as being unprofitable, but said banks had a social obligation to provide them with accounts.

Former Westpac New Zealand chief executive David McLean was behind the bank’s project to provide bank accounts to prisoners.

Verry said it wasn’t fair to expect Westpac to have all prisoners and ex-prisoners.

In the European Union, it is everyone’s legal right to have a bank account.

But Stace said there were some difficult issues around banks providing accounts to some prisoners with violence offences, and some had committed bank robbery.

But the Pathway Trust, which operates in Christchurch, had managed to get Kiwibank accounts for prisoners before release.

Silvan Danuser, a reintegration worker at Pathway, said its success was partly the result of a local link-up between the service, which was nominated in the New Zealander of the Year awards, and local Kiwibank staff.

Fincap, the national umbrella group for budgeting services, helped organise the Paying the Price report.

Jake Lilley, Fincap senior policy analyst, said: “This report reflects the frustrations financial mentors have trying to help people in prison, or who are leaving prison.”

He hoped the report would spur action.

Everyone, including prisoners and ex-prisoners, needed guaranteed access to the services people needed to live their lives, and participate in society, he said.

Other marginalised groups could benefit if banking woes for prisoners could be sorted.

“If you can crack it on prisoner bank accounts … that will help with a whole lot of other groups that are financially excluded too,” he said.

The Reserve Bank Te Pūtea Matua will publish its first financial inclusion strategy later this year.

The Reserve Bank is a member of the Council of Financial Regulators Kaunihera Kaiwhakarite Ahumoni (CoFR). It says life “circumstances” put some people at a high risk of being shut out of key aspects of the financial system.

Being sent to prison is not among the life events CoFR has so far identified.