Financial abuse prevention

Protecting Older Australians

Financial abuse is a serious and far reaching problem that can happen to anyone, but some people, like the elderly, people with a disability or other vulnerable and isolated people are at greater risk.

Increased house prices and reasonable superannuation balances can mean that some older people are in a good financial position. This can lead to family members feeling a sense of entitlement, with some people referring to it as inheritance impatience.

Exact elder financial abuse numbers are difficult to come by – but numbers will increase as population ages, by 2055 Australia’s population is expected to grow to 40 million, around 25% of them will be over the age of 65.

Fact sheet – Protecting yourself from financial abuse: This fact sheet is a plain English guide which provides information about financial abuse and outlines the steps customers can take to better protect themselves, their money and their property.

What is financial abuse?

Financial abuse can take many forms and can happen over an extended period of time.

It includes spending money without permission, forging signatures, coercing someone to sign something, pension-skimming; using the person’s bank account or credit card without their consent; denying them access to their money or bank statements.

It can involve a loan that is never paid back, or threatening or pressuring someone to invest in something on their behalf, or forcing someone to provide care or other services without being paid or fairly compensated, or expects you to pay their expenses.

It can also be pressure to loan money, go guarantor on a loan, bullying a person to change their will, power of attorney or other legal arrangements.

Protecting yourself

• Always protect your bank and financial cards, cheque books and other important documents. Never hand over a PIN or password to anyone.
• If someone asks for money, discuss it first with a trusted family member or friend.
• Get your affairs in order. Talk to your bank about setting up direct debits and pre-authorised bill payments. Consider who has third party authorisations over your accounts and ensure that they are trusted.
• Keep a track on your bank accounts, investments and other assets.
• Put in place arrangements, like power of attorney, for how your money and property will be handled if something happens to you or you can no longer communicate your wishes effectively.
• Always read contracts and other documents carefully and never sign anything under duress, seek legal advice when in doubt or contact police if you think you are being abused. 

Bank staff on the frontline

Bank employees need to be vigilant and cautious when faced with a possible case of financial abuse. To intervene or question a customer inappropriately, or without due consideration and sensitivity may cause embarrassment for the customer, or possibly damage the customer-banker relationship. 

Challenges for bank staff and the solutions

It is currently very difficult for bank staff to report suspected cases - Australia needs an appropriate designated organisation where bank staff can report the suspected elder financial abuse for investigation.

It is difficult to assess customer competency. Banks will continue to offer ongoing training to frontline staff to help them identify and assist customers in difficult and sensitive situations.

Power of attorney legislation is inconsistent across the country, which makes it overcomplicated to detect and report abuse.

Australian banks are calling on Governments to introduce standardised legislation across the country.

In most states such as NSW, Queensland and Victoria, powers of attorney are not required to be registered formally, making it hard for banks to check the legitimacy of a power of attorney. The establishment of a national power of attorney register would help all financial institutions verify the authority of a power of attorney or court-appointed administrator when they present themselves as acting on behalf of a customer.

Australia’s banks will continue to work with governments and other key stakeholders to help ensure that all of the necessary measures, legislation and training are put in place to help protect older Australians from being abused financially. 

Resources to help combat this silent crime

The Australian Banking Association (ABA) is workig with a number of organisations to promote good practice and clearer processes for banks so they can better support customers who may be vulnerable to financial abuse or who want to plan ahead and manage their financial affairs, especially as they get older.

The banking industry is concerned about financial abuse and it wants to work together with interested groups to prevent this silent crime.

Industry Guidelines and other tools are currently under review, awaiting a final decision of Government.

• Industry guideline – Protecting vulnerable customers from potential financial abuse: As a framework to banks, this industry guideline explains what financial abuse can look like, how it can impact customers and the bank’s relationships with their customers, and how banks staffs can respond.
• Industry guideline – Responding to requests from a power of attorney or court-appointed administrator: This industry guideline explains how these different arrangements work legally across Australia, how they are used by bank customers and their substitute decision-makers, and provides a framework for how banks should respond to these arrangements.
• Consumer fact sheet – Setting up power of attorney to help manage your banking needs: This fact sheet covers what customers need to know in order to set up power of attorney arrangements to manage their banking needs and what they can expect from banks. Customers must weigh up the risks and benefits and make a decision based on what matters most to them, without pressure from anyone else because these arrangements can be misused.
• New tool to help detect financial abuse of Australians - Following a successful trial with major banks, Capacity Australia, with support from the Australian Banking Association (ABA), has released a simple online education and assessment tool to help bank staff combat rising financial abuse of vulnerable people.