Nominee arrangements

9.40 Part 3A of the Social Security (Administration) Act 1999 (Cth)provides for the appointment of nominees for both correspondence and payment of social security.^[44] Nominee arrangements provide flexibility for individuals to decide who can act as their ‘agent’, and also operate as a useful mechanism in situations where an individual has limited, intermittent or declining capacity.^[45] For victims of family violence, nominee arrangements can be useful for protecting their income support when they are in transitory accommodation or have no fixed address.

9.41 However, there is a potential for economic abuse of the principal by the nominee. While one stakeholder noted that current nominee arrangements are ‘likely to be used in the best interest of the principal in the majority of circumstances’,^[46] some stakeholders raised concerns about the appropriateness, and level of knowledge, of nominee arrangements among nominees and principals. Stakeholders also raised concerns about:

• safeguards to determine a person’s suitability and capacity to fulfil the requirements of a nominee;^[47]
• a lack of recognition of other legal forms of authority,^[48] which may create inconsistencies and confusion;^[49]
• the lack of review and assessment as to whether the nominee arrangement is in the principal’s best interest or entered into willingly;^[50] and
• lack of penalties attached to the duties of a nominee.^[51]

9.42 Not all nominees will be a family member of the principal. Therefore, economic abuse or duress in nominee arrangements will not be ‘family violence’ in all circumstances. To provide certain safeguards for nominee arrangements between family members and not for others would create a two-tier system. Similarly, to provide stronger penalties for family members who are nominees would create a two-tier system and could also deter family members from acting as a person’s nominee. In addition, the overlap with powers of attorney and enduring guardianship—while at times may be problematic—is beyond the scope of this Inquiry.

9.43 The ALRC recommends that the Guide to Social Security Law should be amended to provide that, where a delegate is determining a person’s ‘capability to consent’ to a nominee arrangement, the delegate should consider the effect of family violence on the person’s capability. This was supported by stakeholders.^[52]

9.44 The ALRC also outlines below other safeguards that may help to protect victims of family violence who are in nominee arrangements but does not make any recommendations in that regard.

Safeguards against abuse

9.45 A number of safeguards are provided in the Social Security (Administration) Act and the Guide to Social Security Law to minimise abuse of a nominee appointment. These include safeguards concerning:

• the process of appointment—including written consent and signatory arrangements;^[53]
• ensuring the capacity of the principal to consent to a nominee arrangement;^[54]
• responsibilities and capabilities of nominees;^[55]
• revocation of nominee arrangements;^[56] and
• penalties.^[57]

9.46 Under Centrelink arrangements, the nominee need not be the person to whom the social security recipient has granted a power of attorney and there are no checks to ensure that a person holding the social security recipient’s power of attorney is informed of any Centrelink nominee arrangement.

9.47 To determine that a principal is incapable of consenting to the appointment of a nominee, a delegate must have sufficient evidence—such as reliable medical evidence, an order officially appointing a guardian or administrator, or some other authoritative source, such as a social work report.^[58]

9.48 Other safeguards include provisions such that where:

• there are questions concerning the principal’s capability to consent, the situation must be investigated;
• the principal is deemed incapable of providing consent, any decision by a delegate to appoint a nominee must be supported by documentary evidence; and
• a principal has a psychiatric disability, a nominee can be appointed where there is a court-appointed arrangement.^[59]

What other safeguards might protect victims of family violence?

9.49 Centrelink arrangements for nominee appointments, reviews and penalties may allow economic abuse by a family member holding a nominee authority to go unnoticed.^[60]

9.50 Stakeholders suggested a number of additional safeguards that might act to protect against economic abuse in nominee arrangements, including:

• additional checks^[61]—such as checks for criminal record, bankruptcy, debt and character references—before a nominee is appointed;^[62]
• improved interview arrangements, including that:
• interviews for nominee arrangements be undertaken by a Centrelink social worker or other staff with relevant training to identify and screen for issues of duress and capacity;
• the principal be interviewed without the (proposed) nominee present; and
• where it is impractical for the principal to attend an interview, the principal’s wishes are confirmed by an independent authority;^[63]
• requirements for nominees to keep their financial dealings separate from the principal’s entitlement, as well as maintaining receipts and records of expenditure;^[64] and
• informing any person holding a power of attorney or enduring guardian of the nominee arrangement.^[65]

9.51 The Commonwealth Ombudsman considered that changes such as these would ‘foster more consistent decision making and ensure representative arrangements that protect customers rather than potentially exposing them to greater manipulation or abuse’.^[66] In addition, the Elder Abuse Prevention Unit recommended that penalties should apply to nominees who do not act in the best interest of the principal, such as where the nominee defrauds the principal or Centrelink.^[67] Further, Advocacy for Inclusion considered that where a person is represented by one person for a number of arrangements, this should act as an alert to a customer service adviser that the person is isolated and may be subject to abuse.^[68]

9.52 However, to make recommendations in light of the above would be beyond the Terms of Reference for this Inquiry.