Following on from the launch of the FSC Guide to the Prevention of Elder Financial Abuse last year, we spoke with NAB's Head of the Office of Customer Advocate Michelle Ward about some of the organisation's practices.
What are some of the difficulties faced within your organisation when elder financial abuse is suspected or identified (e.g., customer denies being scammed, doesn’t want to talk, family members in dispute are making various allegations)?
Even amongst family and friends, many Australians would not feel comfortable to initiate a conversation about money, financial choices or decisions, trust, vulnerability, and particularly diminished capacity. This discomfort, even for financial service professionals, is heightened and these topics are even more complex and sensitive when over-layed with a concern that a client is being subjected to financial abuse.
Financial abuse can be overt acts such as stealing or ‘borrowing’ money or assets that will never be repaid, including forging signatures. It can also be more subtle acts of one party influencing the financial decisions and choices of a vulnerable person to serve their own interests such as changes to a will or beneficiaries or denying a vulnerable person access to information about their finances. It takes on many forms and typically consists of a series of acts over an extended period.
We recognise that it is particularly difficult to investigate suspicions of financial abuse being perpetrated on a client. Elderly people are particularly vulnerable to financial abuse, and overwhelmingly the abuse is being perpetrated by a trusted person, and typically an adult child of the victim. The perpetrator may not even recognise that what they are doing is a form of abuse. They are likely to be operating with a sense of entitlement, that the monies they are taking are reasonable in exchange for care they may be providing to the elderly person, or they are accessing money or assets that will be theirs in the future as part of a deceased estate, i.e. inheritance impatience.
If the client is aware of the abuse, they can be reluctant to seek help or to confirm what is happening because of the value they place on the relationship with the perpetrator and/or fear of retaliation or consequences. Alternatively, the client may not be aware because the acts are being hidden from them, or they may not recognise that what is happening is a form of abuse, for example if they are in the grip of an investment or romance scam.
In any of these circumstances it is especially challenging for our people, albeit necessary for us to act on these concerns or red flags in the interests of our clients. The challenge for many of our people has been fear of getting it wrong and/or overstepping boundaries in their professional relationships, and as a result damaging a valued relationship. We’ve had feedback that our people recognise potential red flags and want to act on these concerns, however feel uncertain as to how to engage in a conversation, what their responsibilities are, and what to do about their suspicions, whether these can be confirmed or not.
We recognise that this is extremely complex and highly sensitive, and we’re committed to enabling and supporting our people to recognise and respond to potential indicators of financial abuse being perpetrated on our clients. We welcome the guidance, support and leadership of the FSC and by the ABA. As an industry we need to continue working together in conjunction with community advocates, to raise awareness about financial abuse of people who are vulnerable, and to continue lobbying for national initiatives such as the POA register and 1800 ELDER Help (an elder abuse helpline that automatically routes the caller to a support service within their jurisdiction). Initiatives such as this will help to reduce complexity, improve accessibility, and could assist in reducing the instance and impact of financial abuse.
How have you sought to address these issues as an organisation?
We are most likely to see red flags or indicators of potential financial abuse in our client facing interactions, and this is would predominately occur within our advice networks. Through these longstanding trusted relationships built upon regular conversations, advisers come to know their clients, their families, and their circumstances. Advisers understand their clients’ behaviours, preferences and financial and lifestyle goals.
As a trusted adviser they are uniquely positioned to observe:
- behavioural changes
- signs of distress, confusion or a lack of care
- anxiety, nervousness or tension in discussions around a third party (including around a partner or family member), or when a third party is mentioned
- any of the above behaviours accompanied by requests to make changes to longstanding financial arrangements without being able to provide an adequate explanation for the changes.
Last year we provided guidance to our NAB Financial Planning Advisers on how to recognise red flags and engage with their clients when they had observed potential indicators of financial abuse, or vulnerability. This included familiar and simple strategies (despite the complexity of the situation) of asking open ended questions to understand what is happening, the reason or motivation behind changes in strategies or unusual transactions, and the extent to which the client provides a reasonable explanation.
The guidelines cover what advisers can and should do, escalation paths for internal support and assistance for them, and external resources such as Lifeline, and support groups for romance and other scams for their clients. We have shared de-identified case studies to increase sensitivity and awareness of indicators of financial abuse, our responsibility to act, and sources of support for advisers and their clients.
We plan to continue and extend this program of work to our self-employed advisers 2020.
What are some of the things your organisation is doing to be more alert to potential risks of financial abuse of highly vulnerable peoples?
Any client can experience vulnerability at some time in their lives, either short or long term. The vulnerability can be the result of physical or mental health issues, disability, frailty through age, or even social isolation.
We have standard assistance for all clients such as interpreter and translation services, and an increasing focus on accessibility – to physical premises, to information, to complaints processes. We are reviewing the way information is provided to clients in statements and disclosure documents, as we acknowledge it can be complex, not clear enough in its language and unengaging. In addition to enhanced internal training and resources, we are also looking to identify and work with external sources of assistance for clients who are victims of financial abuse or scams.
We have detailed processes that recognise the significant role of Power of Attorneys – what they are authorised and expected to do in that capacity in relation to financial matters such as avoiding conflicting transactions. Concerns with how a POA is being exercised will be escalated quickly to ensure the client’s interests are protected.
We’ll proactively contact clients if we observe unusual transactions or requests to ensure what is being requested serves their interests. Through ongoing vulnerable customer training provided to all our client facing people, we have created greater awareness of how clients with vulnerability may present, and what the red flags or potential indicators of abuse could look like. The training also builds capability to engage in conversation with clients to understand what is happening and how we can best support them.
Are there groups that you think financial organisations might not have as high on their radar as being at risk?
People who are socially isolated are at risk of financial and other abuse. The isolation can be geographic, cultural, age or health related. This isolation can be exacerbated by literacy or numeracy issues that result in lack of awareness and understanding of financial matters, including superannuation and insurance. It is particularly difficult if the socially isolated person is dependent on their abuser for shelter and care.
We need to improve our engagement with regional and remote communities, including Indigenous communities. We need to better engage with community workers who might be able to support clients at risk. A highly successful engagement of this kind is the First Nations Foundation’s (FNF) annual Big Super Day Out Indigenous Outreach program which MLC supports. In 2019, 500 Indigenous Australians were reconnected with $9.5million of superannuation funds, an average of $19 000 per person. Unfortunately, the demand exceeded the support that was available – a clear indication that we as an industry can do much more in this area.
One of the most effective long-term preventative strategies to reduce the risk of financial abuse is for financial service providers to proactively seek to build the financial literacy of their clients. This can be achieved through great relationships between clients and their advisers, regular client communications and engaging educative digital content.
This can provide clients with greater capability and self-confidence in understanding and managing their finances.
Click here to download a copy of The FSC Guide to the Prevention of Elder Financial Abuse.