Banking and Elder Financial Abuse – What has changed?

Recently, you might have seen the media splash that was the launch of the Australian Banking Association (“ABA”) campaign to stop elder financial abuse (if not, you can read about it on their website). The ABA is calling for nationally consistent powers of attorney laws, a national powers of attorney register and the establishment of somewhere to report abuse in each state that can investigate and act.

Why, you might ask, has the ABA launched a campaign against elder financial abuse? It could be explained on the basis that banks are best placed to identify suspicious transactions and to speak with their customers about suspicious transactions.  Banks already operate subject to anti money-laundering regulation and report any cash transaction over $10,000 to AUSTRAC. Banks already have internal fraud monitoring systems – you, like me, may have received a call about possible fraud when trying to book overseas holiday accommodation on your credit card.

However, these issues are not new. The harmonisation of states’ powers of attorney regimes has been under discussion and development by stakeholders for many years. Recommendation 5-3 of the Australian Law Reform Commission’s 2017 report Elder Abuse – A National Legal Response was that a national online register of enduring documents and Court/Tribunal appointments should be established after agreement on nationally consistent laws. 

So what has changed?

Federal and State governments are increasingly taking steps to address elder financial abuse. The community sector is working hard on awareness raising and primary prevention. Private enterprise is now joining the call to action but not necessarily for benevolent reasons.

Private enterprise – whether a bank, superannuation fund, private advisers, aged care facilities – regularly deals with substitute decision makers whether attorneys or Tribunal appointed administrators or guardians. Sometimes the personal legal representative does not understand limitations on their appointment, sometimes those dealing with them do not. It is a risk to any organisation to allow a person not properly authorised to act on behalf of a principal, and they may be held liable.  We have assisted elderly or vulnerable clients where a family member or friend is able to obtain personal information about the principal, or carry out transactions on behalf of the principal, despite not being properly authorised. For example, a guardian cannot carry out financial or legal transactions on behalf of a principal. Or an enduring attorney may purport to carry out financial or legal transactions, but that will be unlawful if their powers commence only on the principal’s loss of capacity and there is no medical evidence that is the case.

Banks appreciate the liability risk to them of allowing transactions to occur without proper authorisation. There are a growing number of determinations by the Australian Financial Complaints Authority in favour of an applicant against a bank for allowing unauthorised transactions to occur. 

While we applaud the ABA for drawing attention to the growing problem of elder financial abuse, we also remind our clients and their advisors that losses can be recouped from third parties where transactions are carried out without a valid mandate or proper authorisation.

How we can help

If you would like more information regarding this article or to speak to an Elder Financial Abuse expert, please do not hesitate to contact us.