At a glance
- Economic abuse has huge financial and emotional impacts on small business owners.
- Accountants are an important line of defence for SME clients.
Often hidden in plain sight, economic abuse is more common than many realise. Affecting more than 2.4 million Australians, this form of abuse costs the economy more than $10.9 billion each year.
According to the Australian Bureau of Statistics, 16% of women and 7.8% of men have experienced economic abuse from a current or previous partner.
Despite its prevalence, financial abuse remains widely misunderstood and can often slip under the radar. It typically manifests through coercive and controlling behaviours like restriction, exploitation or sabotage.
For small business owners and partners, this could appear as misuse of business funds, exploitation of vulnerable individuals or controlling all financial decisions.
What does financial abuse look like for small businesses?
Jasmine Opdam, senior policy and advocacy officer at Redfern Legal Centre, says accountants are well-placed to identify during routine financial management, tax planning, or annual reviews. She noted that clients not being able to answer basic questions about their finances may be a red flag for financial abuse.
“Sometimes, we see victim survivors who weren’t even aware that they were the listed director or office holder of a company,” she says. “Often they have no visibility over their financial situation, or they might have signed personal guarantees or business loans for a company that they are not actually controlling themselves.”
“A client who has never lodged their own tax returns before, and has little visibility of them, might be an indicator of their partner holding a lot of control over the finances in the relationship.”
Financial abuse red flags
| Controlling access: limiting your access to money, bank accounts, or tax information |
| Blocking information: setting up business or financial systems that stop you from accessing money |
| Hiding money: keeping income, assets, or accounts secret |
| Taking control: making financial decisions without you or stopping you from using money |
| Shifting debt: putting their debts in your name or making you take out loans for them |
Financial abuse can also take an emotional and ethical toll. Losing control of finances to business partners can result in loss of confidence and self-esteem and, in severe cases, depression and other mental health issues, says Ann Kayis-Kumar, associate professor at the School of Taxation and Business Law at UNSW.
“Supporting victim-survivors is a really profoundly important role for the profession to play,” says Kayis-Kumar.
How accountants can respond to suspected abuse
Accountants are well-positioned to spot the signs of financial abuse in a relationship, whether it’s a client who hesitates when answering simple questions, who can’t access key documents, or who always defers to their partner for approval.
As members of a regulated profession, accountants have a responsibility to report suspicious activity, and to support clients in escaping financial abuse. Accountants who suspect a client is being coerced into financial decisions must consider filing a Suspicious Matter Report (SMR) with AUSTRAC.
This is especially important where financial abuse may indicate wider financial crime or coercive control. Failure to comply with reporting obligations in cases like this can lead to significant penalties.
Before it gets to this point, accountancy practices must train all staff on recognising economic abuse, implement internal policies to guide their response and ensure clear processes are in place to support clients if a disclosure is made.
“A client who has never lodged their own tax returns before, and has little visibility of them, might be an indicator of their partner holding a lot of control over the finances in the relationship.”
The balance between confidentiality and duty of care
Opdam encourages accountants to focus on spotting the telltale signs. The term “financial abuse” can feel confronting, so it’s often more effective to gently explore what clients know, what they can access, and how their partner behaves around financial matters.
Accountants aren’t expected to become experts in dealing with financial abuse, but there are existing support services they can rely on.
“I wouldn’t suggest that you have concerns and ask a client outright, ‘Are you experiencing financial abuse?’,” says Opdam. “Chances are it won’t be safe for them to disclose that to you, and you might actually put them at greater risk. My first suggestion would be to always offer appropriate referrals.”
If you suspect a client may be a financial abuse victim, the National Debt Helpline offers support and counselling to help individuals understand their financial rights and build financial independence. Accountants can also refer clients to 1800 RESPECT, Australia’s national domestic, family and sexual violence counselling service.
Gain further insights into financial abuse and appropriate strategies of intervention in the IPA’s Recognising the Signs of Client Financial Abuse CPD on demand.
