COERCED DEBT IS ECONOMIC ABUSE

Why Banks, Regulators and Safeguarding Systems Must Move From Recognition to Operational Protection

By Samantha Avril-Andreassen

Coerced debt is not ordinary debt.

It is economic abuse.

It occurs where a perpetrator uses coercion, control, intimidation, pressure, dependency, fraud, manipulation or violence to cause another person to take on debt, lose financial autonomy, damage their credit record or become trapped within financial obligations they did not freely choose.

StepChange has reported that around 1.6 million UK adults have experienced coerced debt, and that around one in eight StepChange debt advice clients may be affected by it. This is not marginal. It is a national safeguarding, consumer protection and regulatory failure. (StepChange)

The legal and policy question is now unavoidable:

If banks, lenders, regulators and public bodies know coerced debt exists, what operational duties arise once financial harm becomes foreseeable?

Awareness is no longer enough.

The Debt Is Not Neutral

Traditional credit systems treat debt as a private contractual obligation. A person signs, borrows, defaults and is pursued.

But coerced debt breaks that model.

Where debt is generated through coercive control, the debt is not merely financial. It is a continuation of abuse through the credit system.

The victim-survivor may carry:

• damaged credit history,

• enforcement threats,

• collections pressure,

• housing instability,

• inability to access new credit,

• psychological distress,

• shame,

• and long-term financial exclusion.

StepChange’s research highlights the enduring financial and emotional impact of coerced debt, including barriers to debt write-off, credit repair and recovery. Recent reporting on StepChange’s later findings also indicates that many victim-survivors do not seek help, with shame, fear of judgement and lack of knowledge acting as barriers. (StepChange)

This is why coerced debt must be treated as a safeguarding issue, not simply a collections issue.

The FCA Position: Foreseeable Harm and Vulnerable Customers

The Financial Conduct Authority has already created the regulatory basis for stronger action.

The FCA’s vulnerability guidance recognises that firms must consider the needs of customers in vulnerable circumstances, and economic abuse is expressly relevant to vulnerability in financial services. (FCA)

The FCA’s Consumer Duty also requires firms to act to deliver good outcomes and avoid foreseeable harm. In the context of coerced debt, this means banks and lenders cannot simply say, “The customer signed the agreement.”

The better regulatory question is:

Did the firm identify indicators of coercion, control, financial abuse or vulnerability, and did it act appropriately once harm became foreseeable?

The FCA itself has publicly recognised the hidden cost of domestic financial abuse and the need for firms to work together to improve outcomes. (FCA)

The Responsibility of Banks

Banks are not neutral bystanders where their systems are used as instruments of abuse.

They hold data.

They see patterns.

They process the transactions.

They record missed payments.

They report to credit reference agencies.

They refer accounts to collections.

They decide whether to pause, investigate, escalate, write off, restructure or continue enforcement.

That means banks have operational power.

With that power comes responsibility.

A safeguarding-compliant banking response to coerced debt should include:

• early identification of economic abuse indicators;

• specialist vulnerability teams;

• safe communication protocols;

• temporary collections pauses;

• no repeated retelling of abuse;

• review of credit-file harm;

• investigation of coercion before enforcement;

• referral routes to specialist debt and domestic abuse support;

• consistent use of economic abuse evidence processes;

• and clear pathways for debt write-off or separation where abuse is established.

The development of tools such as the Economic Abuse Evidence Form shows that the sector can reduce re-traumatisation by allowing trained advisers to notify multiple creditors of abuse-related financial harm without forcing survivors to repeat their experiences again and again. (The Guardian)

Why the Current Model Still Fails

The problem is not absence of awareness.

The problem is inconsistency.

Some banks respond well. Others do not.

Some creditors recognise coercion. Others treat the survivor as a standard debtor.

Some systems pause enforcement. Others intensify pressure.

Some firms understand economic abuse. Others continue to rely on rigid affordability, collections and credit reporting processes that were not designed for coercive control.

This inconsistency creates a second layer of harm.

The abuse begins in the relationship.

It continues through debt.

It is reinforced by institutional fragmentation.

SAFECHAIN™ Safeguarding Measures for Change

SAFECHAIN™ provides the missing operational architecture.

The answer is not another report. The answer is a safeguarding infrastructure that makes coerced debt visible, traceable, reviewable and accountable across systems.

SAFECHAIN™ proposes:

1. Coerced Debt Safeguarding Flag

A formal safeguarding marker where economic abuse or coerced debt is identified, triggering specialist handling across banks, creditors, courts, housing bodies and support agencies.

2. Collections Pause and Harm Review

Automatic suspension of enforcement, adverse collections escalation and aggressive communications while coercion, vulnerability and abuse-linked financial harm are assessed.

3. Credit Integrity Protection

A mechanism to prevent victim-survivors being permanently punished through credit files for debt arising from coercion, control or abuse.

4. Single Evidence Pathway

A structured evidence process so survivors do not have to repeatedly disclose trauma to multiple creditors, agencies and institutions.

5. Bank Accountability Audit

A review of whether the bank identified warning signs, applied FCA vulnerability guidance, complied with Consumer Duty expectations and acted to prevent foreseeable harm.

6. Cross-System Interoperability

Debt, housing, court, safeguarding and financial systems must not operate in isolation where the same abuse pattern is visible across them.

7. Debt Separation and Write-Off Protocol

Where coerced debt is established, firms should have a clear route to separate liability, restructure the account, remove survivor responsibility or write off abuse-generated debt.

From Consumer Vulnerability to Structural Accountability

Coerced debt exposes the weakness of a financial system that still treats contractual liability as separate from coercive reality.

That separation is no longer defensible.

Economic abuse is recognised in law.

Coerced debt is evidenced in national debt research.

The FCA has established vulnerability and Consumer Duty expectations.

Banks know financial abuse exists.

The remaining issue is implementation.

SAFECHAIN™ moves the conversation from sympathy to system design.

Because a survivor should not have to carry debt created by abuse, be punished by credit systems for coercion, or be forced to prove the same harm repeatedly to institutions that already have the power to identify it.

Coerced debt is not failed budgeting.

It is not poor financial management.

It is economic abuse operationalised through credit, banking and institutional silence.

And the time for silence has ended.