The number of ageing Australians experiencing financial abuse has grown in recent years, with advisers being urged to recognise the potential red flags.
Financial elder abuse, according to law firm Hall & Wilcox, is defined as the illegal or improper use of an older person’s finances or property.
With an alarming one in six Australians reporting some form of elder abuse, the most common perpetrators are often family members, mainly adult children, as well as friends and neighbours.
Examples of financial abuse include manipulating an elderly person to change their will, misusing a power of attorney, taking control of one’s finances against their wishes or denying the individual access to their own money.
Data from the Australian Institute of Family Studies in 2022 found that the most common form of financial abuse, at 42 per cent, was someone being pressured into loaning money, possessions or property.
Those at the highest risk of financial elder abuse are people with poor physical or psychological health, followed by elders who live by themselves or those experiencing greater social isolation.
For financial advisers with older clients, Hall & Wilcox has identified specific signs to be aware of, which may signal if a client is experiencing financial elder abuse.
These include:
- The client indicating that their mail, such as bank account statements, are no longer being delivered to them
- The client is missing funds from their bank account or can’t locate documents
- Their financial activity has become out of character, unusual or erratic
- Another party, such as a family member, does all the talking or is not allowing the client to speak for themselves
- The client does not understand or is unaware of a recent transaction on their bank account
Advisers may play an integral role in reducing the risk of financial abuse for their older clients, said the law firm.
Active measures that advisers can take to mitigate these risks include taking instructions from the client, or when taking instructions from a third party, confirming they are authorised through a power of attorney or other authority to do so.
Moreover, speaking to the client privately without any family members present, which could indicate potential signs of abuse as the elder may disclose information they are unwilling to share in front of other family members.
Hall & Wilcox added that ensuring the client has the necessary mental capacity to discuss financial matters and upkeeping detailed records of client meetings are other ways to prevent this form of abuse.
