Emma*, a GP, was 47 when she realised she needed to leave her abusive husband. She had bought their home and spent ten years financially supporting him. After years of psychological control and some physical abuse, a friend urged her to leave. With the help of Women’s Aid, she put a few belongings in a plastic bag and moved into a flat with her two kids.
Leaving the relationship had dire financial consequences; it meant renting alone, defaulting on her mortgage and the credit cards she’d taken out to fund their home renovation, and starting from scratch. Because Emma was the breadwinner, the courts ruled that her husband would get to keep the house and around 75% of their assets. What she had left was swallowed up by her legal fees. Thankfully she received some financial support from a local charity, but her credit score was obliterated.
While leaving the relationship drew the abuse to a close, it marked the beginning of a new kind of restriction: Emma was locked out of the UK’s financial system. Five years later, she cannot get another mortgage, still rents and has only been accepted for an extremely high-interest credit card.
20.2 million UK adults find themselves financially excluded, which means they cannot access the affordable financial products and services they need; often – as was the case for Emma – due to past events beyond their control, severely impacting their credit score.
The knock-on effects are serious; it means having limited options in a financial emergency, being more dependent on family or a partner, not having the resources to leave an abusive relationship, and being unable to get a phone contract, mortgage or even a basic bank account. The only services available are often very expensive with high interest that eats into families’ disposable income.
Financial exclusion is an issue that disproportionately affects women. In the UK, your credit history, which informs your credit score, is your gatekeeper to the financial system. The idea is that your past can tell banks and lenders how reliable you are. The problem is that the definition of ‘reliability’ has been modelled on the behaviours of the traditional working man. To access the best and most affordable financial products, you’ll need regular and predictable income, a stable address, and proof that you can use credit well.
Nina Mohanty, founder of Bloom Money, a tech company empowering migrant communities with financial tools describes it as a systemic problem: “It’s uncomfortable to hear but the patriarchy has shaped the UK financial system from how credit scoring algorithms are written to the cost of childcare.”
While we are making progress towards equal working opportunities for women, on average, women still have very different financial lives from men. They are likely to earn less, do more unpaid domestic work and take time away from their careers to have children; patterns that the credit scoring system incorrectly identifies as predictors of being ‘unreliable’. This translates into a real fear of being locked out of the financial system. According to research published by ethical lender, Plend, women feel significantly less able to access credit than men. Confidence in having a financial safety net is even lower for ethnic minority and single women.
Women are also more likely to be victims of financial abuse, a legally recognised form of domestic abuse that includes the use of financial control over a partner, something 1 in 6 women in the UK report to have experienced.