An estimated 1.6 million people in the UK fell victim to coerced debt over the past year, according to a revealing new report by the charity StepChange. Coerced debt occurs when an abuser fraudulently uses someone’s financial identity, leaving them with unexpected liabilities. Nearly 60% of those affected by this form of economic abuse are forced to deal with the repercussions alone, often unaware that support is available or how to access it.
The report highlights a worrying trend where less than a fifth of StepChange's clients, who incurred debts through coercion, managed to have any portion of their debts written off. In a few cases, such as one client who saw £30,000 of her debts erased, success was achieved. However, many others were turned away, left to navigate the complexities of financial recovery without assistance. Coerced debt can have long-term consequences, including a negative impact on credit history for up to six years, affecting everything from obtaining a mobile phone contract to renting property or even job applications.
Joanna Thomas's story exemplifies the personal toll of coerced debt. Working for a UK government department, she received a bonus, only for her ex-husband to withdraw it to purchase a boat on eBay without her consent. His financially reckless and controlling behavior left Thomas paying out at least £130,000. As a result, she was forced to leave her family home and sleep on sofas due to a lack of financial independence.
“I had just moved to university. My only reference point was my mum and dad’s relationship. They always had joint accounts, and my dad was always very much in charge of money. I thought that was what you did.” – Joanna Thomas
Thomas's ordeal illustrates how coerced debt can ruin credit files, taking over 11 years for her to escape its lasting impact. Despite explaining her situation, she found little support from financial institutions.
“I explained the situation but the mortgage company said there was nothing they could do.” – Joanna Thomas
Anita's experience further underscores this issue. She accrued a debt of £52,000 in her name due to an abuser who used their joint savings without her consent. Such stories are alarmingly common, yet responses from banks and creditors remain inconsistent.
“We found that victim-survivors often didn’t disclose what they’d been through,” – Genevieve Richardson
“This was often related to safety, but it was also related to the fact that they didn’t even realise that they’d been through coerced debt, or that there was anything that they could do about it.” – Genevieve Richardson
Richardson highlights the need for greater awareness and support mechanisms for those affected by coerced debt. The Financial Conduct Authority (FCA) is urged to create an industry-wide approach to prevent foreseeable harm arising from economic abuse. StepChange advocates for an agreed approach to all aspects of economic abuse and coerced debt.
One potential solution is a "tell us once" service, akin to those available for dealing with a deceased person's affairs. This approach would streamline the process for victims seeking relief from coerced debt. Additionally, a successful pilot of an "economic abuse evidence form," devised by Money Advice Plus and Surviving Economic Abuse, shows promise in addressing these issues.
Sue Owen-Bailey emphasizes the importance of intervention when credit has been taken out in someone’s name without their consent.
“If someone has been a victim of economic abuse, and credit has been taken out in their name without consent, we can help query these applications with lenders.” – Sue Owen-Bailey
Practical measures such as raising disputes with companies, adding passwords for extra security, breaking financial links with abusers, and annotating accounts can provide much-needed relief and protection.
“We can raise disputes with relevant companies, saving time and distress. We also help people add passwords to their credit reports for extra security, break financial links with others, and add notes to accounts to explain they were the result of abuse.” – John Webb
Despite some success stories, such as clients receiving debt relief, many continue to fall through the cracks due to inconsistent responses from advisers and banks.
“Even in cases where clients did tell debt advisers or banks what they had been through, there was inconsistency in the responses,” – Genevieve Richardson
“We saw some people getting really great results. One client had £30,000 of her debts written off, but others were turned away. A lot of people are slipping through the cracks.” – Genevieve Richardson