Family violence and sexual abuse are significant issues for people with mental illness. Abuse impacts on mental health and is a contributing if not causal factor in the development of mental illness. Mental health services in Australia are governed by federal and state mental health policies since the early 1990s. This study examined policy guidance by government for mental health services in Victoria in relation to intpersonal trauma experienced by mental health clients. A policy analyis and comparative study between two Australian states showed clear difference in policy direction. The study concludes with recommendations for the state of Victoria (study site) and the need to provide policy on the issue for mental health services. Targetted policy would provide strategies to work within a trauma-informed framework and promote the concept that working within such a framework constitutes core business for mental health services. There is a clear need to provide mental heatlh services that take a sensitive and proactive approach to trauma issues for people with mental illness.