The Financial Services Council (FSC) is calling on financial service providers to implement policies and procedures to prevent elder financial abuse.
The FSC has launched a guide for non-banking financial services to identify, address and prevent the financial abuse of their older clients and customers.
FSC chief executive, Sally Loane says: “It is vital that every sector of the wealth and asset protection industry, including those working in superannuation, advice, trustee companies and life insurance, are equipped with the guidance they need to navigate this complex but intolerable problem.”
The FSC defines elder financial abuse as any activity by an individual that seeks to use fraudulent, illegal, deceptive or otherwise improper acts or processes to advantage from the financial resources of an older or elderly individual.
The FSC says advantage can include personal profit or gain, enabling profit or gain for a relative, friend, spouse or business associate, or deprivation of the right of an older or elderly individual to access benefits, resources, belongings or assets for any reason.
Elder abuse is more prominent than ever. Attorney-General Christian Porter estimates that
as many as 185,000 older people experience some form of abuse or neglect nationally each year.
Brendan French, executive general manager, customer and community advocacy at Commonwealth Bank says when he started at the bank 12 years ago it was an occasional terrible story and now it is a lot more prevalent.
One reason for the increase in elder financial abuse is “inheritance intolerance”; people are living longer and their adult children get sick of waiting for their inheritance.
In light of this, financial service providers need to be aware of red flags to prevent elder financial abuse.
Behavioural and transactional red flags include signs of distress, confusion or lack of care, or tension in discussions around a third party, activity in previously inactive accounts, and address changes on an account by a third party.
CBA’s French says that his focus has been on preventing abuse as it is difficult to deal with after it has happened.
French says: “From our perspective one of the challenges we face is how to address that dynamic where often the person who is subject to elder abuse has no interest in it being a public matter and after the fact that it is almost impossible to rectify because people do not follow through.”
The FSC is urging financial service providers to have policies in place for prevention.
Policies should include a stated commitment and an outline of the steps being taken by the company towards prevention of abuse.
In addition, the policy should be reviewed for effectiveness and include feedback with references to case studies.
Procedures are expected to work alongside policies and include measures such as responding to red flags in client communications, alerting management to suspicious activity and implementing steps to verify the validity of legal instruments such as an enduring power of attorney.
CBA’s French supports the Law Reform Commission’s recommendation for a national register for power of attorneys and guardians.
French says: “If you go to a bank branch with a power of attorney, we don’t know if it’s the most recent one. So we can only act on the information we get.”
Jessica Latimer, special counsel at Moores says trusted people often perpetrate elder financial abuse on their family members or friends but if that person is swapped for a stranger it would be known as theft.
Latimer shared that she had a client who inherited a $3 million share portfolio and went to a trusted financial adviser. The client then began to instruct the adviser to give instructions to the broker to progressively sell down the share account.
The reason for this is that he had fallen in love with a non-existent woman overseas. The client was direct with the adviser about where the money was going and was forwarding emails from the non-existent woman to the adviser.
The client’s family had expressed concerns about his capacity to the financial adviser. The adviser then spoke to his licensee’s in-house lawyer who advised that until they have evidence that this person has lost capacity, they will presume that he has capacity.
The client called the adviser to sell-down a final $520,000 transfer. The junior adviser was uncomfortable doing this and advised the client he thought he was being scammed. The senior adviser then told him to act on client instruction.
The client was then left with no money and is now residing in a supported residential service.
Deborah O’Neill, Labor senator for New South Wales says: “Elder abuse will be one of the biggest challenges for our aging population and failure to tackle elder abuse will have a devastating impact on the future of our country.”