Your InFinance Publication

FINSIA’s InFinance keeps you up-to-date and in-the-know. 

Industry at the centre of elderly abuse reforms

by Matt Smith | 20 Jun 2017

Banks and financial services providers are taking a central role in addressing the issue of elderly abuse in the community, a new report shows.

Following submissions from the financial planning and financial services industry and facilitated by FINSIA, the Australian Law Reform Commission (ALRC) has put forward a report urging the Federal Government to dig further into the issue.1 Industry at the centre of elderly abuse reforms - InFinance - FINSIA 

In particular, FINSIA advocates for a national prevalence study to be conducted to understand the occurrence of elder abuse and the forms it takes.

The FINSIA submission also pushes for a national online register of enduring power of attorney documents, and for safeguards against the misuse of enduring powers.

FINSIA also advocates a review of the SIS Act provisions regarding death benefit nominations, and the introduction of prescribed arrangements for SMSFs where a trustee loses capacity.

In addition, FINSIA asks that the Code of Banking Practice offer guidance in the area by providing examples of reasonable steps that banks can take to detect and respond to financial elder abuse.

The ALRC’s report was published in the last week to coincide with World Elder Abuse Awareness Day and contains 43 recommendations in total for the Attorney-General, George Brandis, to consider.

“While elder abuse often overlaps with other forms of family violence, the elderly are a growing community that has particular vulnerabilities so it’s really important to understand how often elder abuse occurs,” says Caroline Falshaw, FINSIA’s Head of Industry Affairs and Policy.

The data relating to elderly abuse in Australia is limited, a situation which has hampered policy responses, Falshaw notes.

Front line

“Banks and financial services providers are often the frontline in seeing suspicious activity but the feedback we had was that it was unclear what the reporting pathways were, and how these should be balanced with obligations under the privacy legislation,” she says.

1 Industry at the center of elderly abuse reforms - InFinance - FINSIA 2The ALRC’s recommendations have drawn some criticism for including under a voluntary code the responsibility to protect vulnerable customers from financial abuse. “’Reasonable steps’ still needs to be defined, to ensure all banks meet a standard. And we need transparency to know what financial abuse banks are dealing with, how and when,” Eileen Webb, Curtin Law School’s associate professor, notes.

The success of the ALRC’s recommendations depends on the good faith of the banks and could leave some customers uncovered and the banks with no one to report abuses to, Webb notes in her piece for The Conversation.

Around 9 per cent of older people living in the community are financially abused and it is likely the number is even higher among those with cognitive impairment or who live in institutions, Webb points out.

Financial exploitation of older people is increasing and mostly perpetrated by those close to the victim, including family members, Webb notes.

Smoking gun

Academics have for some time been urging lawmakers to move forward with policy to address elder abuse relating to financial decisions, despite the lack of evidence-based research in the area, a topic recently highlighted by InFinance.

The “smoking gun” evidence experts in neuroscience point to relates to the impact of age and cognitive decline on financial choices including credit card balances, transfer offers and mortgages.

Some of this evidence is highlighted in academic studies such as this one published in a Harvard University journal.

“While it wasn’t part of this inquiry, there is a critical need to further the work on financial decision making and cognitive decline,” Falshaw notes.

“With the size of Australian superannuation and a growing self managed segment, this work will help policy makers to future proof the retirement income system,” she says.

A national prevalence study like the one recommended in the ALRC report will help to create an evidential base to inform policy responses and “hard data” to raise awareness in the community.

The establishment of a national online register of enduring power of attorney documents is a “no brainer” for FINSIA members, Falshaw describes.

The ALRC recommends that there should be restrictions on who can be an attorney, and FINSIA members agree that there should be an emphasis on enduring attorneys demonstrating independence and offering financial expertise, she says.

Senior members of FINSIA’s Financial Advice and Services Industry Council were tapped to lend their expertise for the submissions.


Comments

Share this