103 Financial abuse of older people will often involve misusing funds in a bank or other financial institution. For example, money may simply be withdrawn from an older person’s account, or used to pay someone else’s bills, without the account holder’s permission. Sometimes abuse might involve presenting banks with fraudulent or revoked guardianship or power of attorney instruments.
104 There may be other ways of committing elder abuse that involve some sort of interaction with a bank or other financial institution. This raises the question of what, if anything, banks might do to prevent and respond to financial abuse of older people.
Question 25 What evidence is there of elder abuse in banking or financial systems?
The role of financial institutions
105 Financial institutions such as banks can play an important role in preventing financial abuse in two ways. First, by helping to raise general awareness of financial abuse among their customers and by outlining measures customers can take to better protect themselves. The Australian Bankers’ Association (ABA) has prepared two consumer fact sheets for this purpose: Protecting yourself from financial abuse and Setting up a power of attorney to help manage your banking needs. Further, banks offer products and services, such as joint accounts, which may be used as a form of support for an older person, but may also be subject to abuse.
106 Secondly, financial institutions can assist in protecting against financial abuse by detecting financial abuse and intervening. The ABA has developed two industry guidelines on financial abuse: Protecting vulnerable customers from potential financial abuse and Responding to requests from a power of attorney or court-appointed administrator. While these industry guidelines are voluntary, they have been agreed to by the ABA’s member banks. The ABA also worked with Capacity Australia to develop a new online education and assessment tool to build on existing training programs for bank staff.
107 There have been calls for all banks to provide mandatory training for staff about financial abuse (using the resources developed by Capacity Australia) and dementia (using resources developed by Alzheimer’s Australia).
Reporting suspicions of financial abuse
108 Neither statute nor the ABA’s Code of Banking Practice specifically require financial institutions to report suspected financial abuse. This differs from the approach taken in the United States (US) where almost every state encourages or mandates that financial institutions report concerns of financial abuse. The bodies to whom bank tellers must report varies across states. There have been calls for financial institutions in Australia to be required to establish protocols to report suspected financial abuse.
109 The ABA has suggested that financial institutions are constrained from reporting suspicions of financial abuse because of their legal obligations. Such obligations include: a financial institution’s duty to carry out a customer’s mandate, including where a person is acting as agent for the older person and an instrument or order contains the necessary authority; the need to refrain from discriminating against people based on age or disability; and requirements under privacy laws. Obligations of confidentiality and concerns about a possible action in defamation may also serve to constrain these institutions from reporting suspected financial abuse.
110 While there are exceptions and defences to a breach of confidentiality, breach of privacy and a claim of defamation that may be relevant in particular circumstances, at present there is no statutory immunity for financial institutions reporting suspected elder abuse. Some states in the US have immunity provisions for the reporting institutions. Relevant legislation and codes in Australia could possibly be amended to protect financial institutions from any breach of contract, breach of confidentiality, interference with privacy, and defamation suit when the suspected financial abuse was reported in good faith. In addition to the introduction of immunity provisions, banks could amend their contractual terms and conditions to obtain prior written agreement permitting disclosure of suspected abuse to the police or a regulator.
111 Further, it may be that some states do not have a government body to which banks might report suspected abuse. It has been suggested that reports of suspected financial abuse should be made to state public advocates. The role of public advocates is discussed below.
Further reform suggestions
112 The ABA has called for a nationally consistent approach to elder abuse. In particular, it considers that inconsistent regimes with respect to formal arrangements across the states and territories are a key risk for the financial abuse of older Australians. The ABA has also called for formal instruments to be registered to assist in establishing the authenticity and currency of an instrument. This is discussed further below.
Question 26 What changes should be made to the laws and legal frameworks relating to financial institutions to identify, improve safeguards against and respond to elder abuse? For example, should reporting requirements be imposed?