ASIC has adopted a temporary no-action position to enable large banks (“eligible licensees”) to withhold the reporting of certain credit information on consumer credit reports, in cases where disclosing the information could lead to consumer harm.

For example, where a victim-survivor holds a loan jointly with their partner (who is the perpetrator of family violence) and they are experiencing financial hardship, there may be situations where a victim-survivor does not want their partner to know that they have agreed to a financial hardship arrangement with an eligible licensee. In this circumstance, ASIC’s position will enable eligible licensees to help the victim-survivor by withholding financial hardship information on their (and their partner’s) credit report.

“ASIC recognises that these risks for victim-survivors could also arise when a credit provider or lessor notifies a joint account holder of the outcome of a victim-survivor’s request for hardship assistance in accordance with the credit provider or lessor’s legal obligations,” ASIC said in a statement.

“Accordingly, ASIC has also adopted a no-action position that enables credit providers and lessors to withhold notices to joint account holders in these circumstances.”

Family lawyers have welcomed the new measures — and in conversation with Lawyers Weekly, three firms revealed how the new policy might benefit their clients and other victims of family violence.

Justin Dowd AM, head of growth and markets at Australian Family Lawyers, welcomed the announcement — and called it “a small but significant recognition of the importance of providing all possible protection where justified”.

“This will have the effect that persons in need of protection need not fear that any application they make for financial assistance on hardship grounds will be disclosed to the other party. Apart from a fear of retribution, it should also give the person in need of protection some additional financial assistance when it is most needed. It will provide a layer of protection and confidence when most needed,” he said.

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“This is part of the ongoing and increasing recognition of family violence in its various forms, including financial coercion and adds to the culture of the legal system to provide whatever practical assistance is possible. It reiterates to family lawyers and society generally, that family violence must be recognised and responded to in a flexible and nuanced way.”

Macpherson Kelley principal lawyer and accredited specialist in family law Natalie Fielding echoed a similar sentiment and said that this move might help protect victims from further abuse.

“This decision by ASIC is a positive step for maintaining privacy and autonomy of victims of family violence who are undergoing the difficult process of fleeing their perpetrator. Many victims of family violence, have been subjected to years of financial abuse prior to their separation, and this is enhanced when they separate and struggle to pay their mortgages and loan and other bills. Unfortunately, this financial abuse can continue even after they have left their home.

“Anyone familiar with family violence would know that victims are often fearful that their perpetrator will discover that they are leaving or seeking help. In the example where a victim has agreed to a financial hardship arrangement, indeed it benefits the safety of the victim that this information cannot be readily discovered by the perpetrator and provides them an opportunity to have some financial relief whilst they get the assistance they require,” she explained.

“Sometimes perpetrators of family violence will withhold consent for financial hardship from their estranged spouse, to make it more difficult for the victim to apply for financial hardship, leading to further financial abuse.”

Hayder Shkara, principal at Justice Family Lawyers, said the new policy was “interesting”.

“The purpose of ASIC’s no-action position is to help protect debtors who may be victims of family violence and to enable credit providers to support these debtors. It is a small but fantastic step in recognising the needs of those in vulnerable positions and our firm has many clients who will benefit from this change, if it is implemented correctly.

“From a family law perspective, it is impressive to see that ASIC is using the term ‘family violence’ in its broadest sense, and I expect that the threshold to qualify something as family violence to be very low. That is, there will really be no test to qualify someone as being a victim, and that it would be up to the person to declare and be truthful about their circumstances,” he said.

“What needs to now occur is now an education campaign to credit providers helping them understand what their current obligations are, and ensuring they have processes in place to assist and guide those who are victims of family violence.”

In addition to an educational campaign, there are a number of other elements that need to be monitored, added Mr Dowd.

“It will be important to monitor the application of this policy and to assess its effectiveness at the end of the trial. Presumably, such assessment will include consideration of its extension (assuming it is deemed successful) to other financial institutions,” he said.

“It will also be important to consider/assess how these actions may impact the legal duty of each person engaged in a financial dispute under the Family Law Act, to disclose their financial position ‘fully and frankly’. There is potentially an inconsistency in the ASIC policy announcement and the relevant considerations of the operation of the Family Law Act.”

Ms Fielding added that whilst victims of family violence will be reassured by this position, more needs to be done to protect them.

“From a legal perspective, family lawyers will be able to reassure their clients with certainty that they can seek a financial hardship arrangement with discretion and not have their estranged partner block their ability to claim financial hardship leading to further financial abuse.

“This announcement will stop information that was used in their hardship application, being used against them in Magistrates’ Court proceedings in relation to intervention orders and in Federal Circuit and Family Court proceedings and their potential safety,” she said.

“As a society, we need to look for ways to provide further opportunities to protect from family violence particularly around financial support and services to enable people to flee violent situations.”