Redress

10.47  In Chapter 5, the ALRC recommends the vesting of tribunals with expanded compensatory powers for the abuse or misuse of a power, or the failure to exercise a duty, by substitute decision makers including guardians and financial administrators. This aims to deter people from acting outside of their power, while also providing a more accessible avenue for redress when that occurs. State Trustees Victoria, however, observed:

One of the more distressing features of State Trustees’ investigations into allegations of financial abuse is that often, by the time the issue has been identified, an application made to VCAT, and an administrator appointed, the offender has squandered what was misappropriated and there are no assets to recover.^[89]

10.48  As a protection against this, some states and territories permit the public trustee to require that security be lodged with state trustees.^[90] NSW introduced a surety bond scheme in March 2015. In the Discussion Paper, the ALRC asked whether ‘the [mandatory] surety bond scheme of the NSW T&G should be adopted nationally, to address situations where compensation orders cannot restore the person to their original state because misused funds have been totally depleted’.^[91]

10.49  Since the release of the Discussion Paper, the NSW Government has announced an independent review of this scheme due to the generally negative reception of it by the public.^[92] Additionally, while the ALRC only received a few submissions on this issue, the majority of those were opposed to a mandatory scheme.^[93] The Law Society of South Australia submitted, for example, that surety bonds were a failure in the context of intestate estates because insurance companies would not provide them.^[94] The Law Council of Australia also raised questions about the commercial availability of surety bonds.^[95] The Office of the Public Advocate (Vic) noted:

data presented by State Trustees (Vic) and the NSW Trustee and Guardian suggests around 9 to 20 per cent of identified financial abuse is perpetrated by a financial administrator. It is important to note that the data presented involves just 30 or so cases across both states … this is far less than one per cent of the thousands of administration orders that are in force in a given year … OPA questions whether the potential benefits of surety bonds would be worth the significant costs imposed on thousands of people each year.

10.50  Further, stakeholders submitted that a mandatory requirement would capture all private financial administrators, regardless of how well the administrator is performing, and noted the deterrent effect on people willing to take on this role.^[96]

10.51  In light of the ongoing review of the mandatory surety bond scheme and the concerns raised by stakeholders, the ALRC does not recommend that a mandatory surety bond scheme be adopted at this time. The Public Trustee (Qld) suggested the adoption of a statutory insurance scheme, as part of the establishment of a national register, may be an alternative approach.^[97] Consideration of this approach could occur as part of a broader consideration by state and territory governments of the ALRC’s recommendations on the establishment of a national register.^[98]