New Financial Safety Alliance aims to embed ‘safety by design’ across Australian credit and banking products
Australia’s major banking and finance firms have formed a new alliance to address the misuse of financial products in cases of economic abuse.
The Financial Safety Alliance has been established by social enterprise Flequity Ventures and brings together the Australian Banking Association (ABA), the Australian Finance Industry Association (AFIA), the Customer Owned Banking Association (COBA) and the Australian Retail Credit Association (Arca).
The initiative is intended to help more than 200 banks and lenders apply “financial safety by design” principles to their products and customer processes. The focus is on limiting the ability of perpetrators to weaponise loans, accounts and other financial tools, while providing more consistent support to victim-survivors.
The alliance builds on work already undertaken by the sector, including changes by 40 banks to their terms and conditions to explicitly prohibit the misuse of financial products to coerce or harm others. Those changes are estimated to cover more than 20 million customers, signalling that financial abuse may lead to serious consequences for perpetrators.
Flequity Ventures, which specialises in financial safety by design, will work with the industry bodies to develop practical tools and frameworks that lenders can implement within their systems, policies and product design.
“Together, we’ll create tools to apply financial safety by design, closing the loopholes that abusers exploit and providing more consistent support to customers,” said Catherine Fitzpatrick (pictured top, far left), chief executive of Flequity Ventures.
ABA chief executive Simon Birmingham (pictured top, second from left) said the new alliance marked a collective step by the industry to reduce those risks.
“Unfortunately, banking products are exploited by the perpetrators of totally unacceptable financial abuse,” Birmingham said. “It’s despicable behaviour that we want to stamp out.
“Through this coordinated action, Australia is setting a new benchmark for how financial institutions can work together to prevent abuse and safeguard customers. “Australian banks are taking world-leading steps to help embed financial safety by design principles in banking products, helping stop abuse before it occurs.”
For non-bank lenders, AFIA said the alliance would support the application of safety-by-design thinking to products such as personal loans, car finance and other forms of credit commonly used alongside mortgages.
“Australia’s finance industry stands united to deliver strong, consistent protections and pathways to support those experiencing financial abuse,” said Diane Tate (pictured top, second from right), chief executive of the Australian Finance Industry Association. “This joint initiative puts customer wellbeing at the centre of innovation, strengthening trust across our industry through embedding safeguards that put people first.”
COBA indicated that customer-owned institutions, which often have deep links in local communities and regional markets, see the alliance as a way to standardise responses to financial abuse across the system.
“Customer-owned banks witness the devastating impact of this insidious issue daily, which is why we are joining forces to address it on a system-wide level,” said Michael Lawrence (pictured top, far right), chief executive of the Customer Owned Banking Association. “Customer-owned banks are deeply committed to the people and communities we serve, and this alliance will empower the entire industry to better identify abuse, stop perpetrators from misusing banking products and ultimately protect customers.”
Arca, representing credit reporting and related services, stressed the role of credit and credit data in both enabling and preventing financial abuse.
“Credit should be a tool for supporting your life, not a weapon,” said Elsa Markula (pictured right), chief executive officer at Arca. “While our members are in the business of funding Australian lives, whether that’s buying a home, getting a car on the road, or simply managing everyday purchases, they also witness the devastation of financial abuse firsthand.
“We are proud to join this alliance, developing a framework that will not only improve recovery support for victim-survivors but, crucially, prevent the credit system from being weaponised in the first place.”
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