Fact Sheet – Protecting yourself from financial abuse
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.
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.
The banking industry is concerned about financial abuse and it wants to work together with interested groups to prevent this silent crime.
Bank staff on the frontline: challenges and solutions
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.
- 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 Australians from being abused financially.
Download these industry guidelines
- Industry guideline – Preventing and responding to 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 – Preventing and responding to family and domestic violence: This industry guideline provides guidance for banks to support customers who are experiencing family and domestic violence.
- 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.
Fact Sheet – Setting up power of attorney for banking
Financial abuse prevention
- 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.
The Australian Guardianship and Administration Council has produced a helpful guide about making an enduring power for financial decisions: You Decide Who Decides
Safe & Savvy: a guide to help older people avoid abuse, scams and fraud.