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Advisers detail ways to tackle ‘insidious’ financial abuse

Privacy law reforms must strike the right balance to ensure protection for domestic violence victims, financial advisers say in a submission to a parliamentary committee.

The Financial Advice Association Australia submission also makes recommendations that it says will help stop or reduce the impact of financial abuse. These include action to raise public awareness of financial abuse and the establishment of a hotline for consumers and service providers.

The association says financial advisers are uniquely positioned to spot signs of financial abuse due to their close relationships with clients and their families, and are keen to do all they can to stop “this serious and insidious form” of domestic and family violence.

Collaboration with other organisations and regulatory bodies is crucial to effectively address financial abuse, but barriers such as privacy measures and inadequate whistleblower protections can impede co-operation.

“Privacy laws, while essential for protecting individuals’ personal information, can also restrict the sharing of information necessary to identify and address financial abuse,” the submission says. “Striking the right balance between privacy protection and the need for critical information to be shared is essential.

“It should be considered as the government implements the Privacy Act Review recommendations.”

In May the federal government responded to the Privacy Act Review, agreeing to 38 recommendations, giving in-principle support for 68 and noting the remaining 10.

On whistleblower protections, the submission says inadequate safeguards can dissuade people from reporting financial abuse.

The association says its members have expressed concern that existing laws could be ineffective in protecting a financial adviser from harassment or legal challenges from a perpetrator of financial abuse, risking personal and professional harm.

“Financial abuse, unfortunately, appears to sit in a regulatory gap,” the submission says. “There is no specific legal obligation in relation to financial services companies dealing with suspected financial abuse. There are issues with privacy, and with gaps in whistleblower laws that provide protection when information needs to be shared and protect professionals from reporting financial abuse.”

The association says financial abuse is a pervasive issue that requires urgent action.

“Through clear guidance, training and support, financial advisers can help protect clients and other family members from financial abuse and support them in regaining financial independence,” association CEO Sarah Abood said.

The Parliamentary Joint Committee on Corporations and Financial Services inquiry into the regulatory framework on financial abuse is expected to report by October.

Click here for more on the inquiry.