Care Financial Counselling Centre ACT has slammed the Australian government's plan to remove critical protections for women experiencing economic abuse.
The federal government has proposed a suite of changes aimed at reducing red tape for lenders as part of its economic recovery plan.
Lenders are currently required to undertake an assessment process that will often put them on notice when loans should not be approved.
Red flags, including a women's signature on the loan while her partner does all the talking, or the applicant's lack of financial stability, should be taken into account before approval is granted.
Financial abuse is legally recognised in the ACT as a form of family violence and lenders' failure to undertake the necessary checks have been used in the past to fight the validity of a loan.
Care Financial chief executive officer Carmel Franklin said removing these laws would reduce the ability of advocates like financial counsellors and community lawyers to assist survivors with debts that they accrued during abusive relationships.
Financial counsellor Rosie Fisk said she recently assisted a young woman whose former partner had threatened to harm himself if she didn't assist him to get a loan for a car.
"She was very young at the time - about 18. She applied for the loan and was surprised that she got it," Ms Fisk said.
The pair broke up not long after and the woman was left with mounting debt and no vehicle after her former partner took off with it.
"She kept paying the loan for a couple of years until she got to the point where she couldn't afford to pay it any more," Ms Fisk said.
When the financial counselling centre requested documentation of the approval process they found the appropriate checks had not been completed.
"Given that she was coerced into the loan and didn't receive any benefit from the loan we were able to argue on her behalf that this loan did not meet the responsible lending requirements and the bank waived the debt," she said.
It's often hidden and minimised and many people find it hard to see that they are in an abusive relationship.Financial counsellor Rosie Fisk
"Otherwise she would've just been saddled with that debt for many years and also a lot of interest."
If adopted, the amendment would be part of a suite of changes to Australia's consumer credit framework contained in the National Consumer Credit Protection Act 2009, aimed at reducing the time it takes for individuals and small business to access credit.
The reforms would provide lenders more flexibility to make decisions based on the "characteristics of the borrower" and the type of credit, according to treasury.
Should legislation be passed the change would come into effect on March 1.
Ms Fisk said financial abuse could happen to anyone and could be quite hard to recognise.
"It's often hidden and minimised and many people find it hard to see that they are in an abusive relationship," she said.
"The responsible lending laws help protect people who are impacted by financial abuse.
"It's vital to reducing the impact of financial abuse in our community that we keep those responsible lending laws."