Elder abuse is a problem so prevalent and pervasive in our culture that calls for an inquiry were made last year. Recently, the Australian Law Reform Commission’s Final Report on elder abuse was tabled. It made 43 recommendations for law reform to protect the rights of older Australians.

Abuse of elders includes any act that harms an older person, such as social neglect and physical violence. But it is the financial exploitation of older adults that is most common. A Monash University and Victorian State Trustees study found that financial abuse affects up to 5 per cent of Australians aged 65 and over. The abuse is generally carried out by the older adult’s own children and the victims are mainly women.

The dilemma

Recently, we received a call from an adviser seeking our help learning how to deal with a situation that involved an elderly client and her adult son. The adviser became involved in the matter, which resulted in a complaint being made against him to his licensee, the Australian Securities and Investments Commission and his professional association.

The client was a 97-year-old pensioner with three adult children, two daughters and a son. She told her adviser she had given her son $21,000. When the adviser asked the client why she did this, she said if she had not given her son the money, his wife would’ve left him.

The client’s son (a retired pilot) and her daughter (also a single pensioner) had entered into a discussion about the son selling his sister a car; however, nothing was formalised. The car was a second-hand vehicle worth about $10,000. When the son decided he wanted to sell the car, he told his sister he wanted $18,000 for it. His sister said she did not have the money and she could not buy the car. Nevertheless, the car was delivered to the sister and she was expected to buy it for a grossly inflated price.

The extended family became involved in the dispute and things became quite nasty. At this point, the son’s wife told the client she would leave the son if they were not paid for the car. The son had been divorced twice previously and the client did not want to see her son go through another one. The client sent her son $18,000 for the car right away and another $3000 for the trouble she thought she had caused.

The adviser urged his client to complain to a body that deals with elder abuse; however, the client said she did not want to cause any more trouble and in her own words she was a “stupid old woman”. When the adviser challenged the son and asked him to return the money, the son said this was a private agreement between him and his mother.

A week later, the adviser received a call from his licensee after a letter of complaint was made about him by the son, on behalf of the client. The complaint was about the fees the adviser charged – they wanted the fees returned. The letter stated the client was terminating her relationship with the adviser and he was not to contact the client anymore. They also requested a copy of the adviser’s files. The adviser in question is now contemplating his options.

What can advisers do?

Financial advisers are at the front line of identifying potential cases of covert – financial, emotional and psychological – abuse. The adviser in this case did what he thought was the right thing. Calling the client’s son and making demands when he did not have the emotional buy-in and authority of his client, however, was the wrong decision.

As upsetting as it sounds, if an elderly client is not prepared to help themselves and there are no other support people willing to step in, it may be a case of having to sit back and do nothing. In many instances, the victims of abuse are either not aware or are in denial that someone close to them has taken advantage of them. In this case, the client’s daughter did not want to progress the matter because of the physical toll it had taken on her mother, even though she was outraged by what her brother and sister-in-law had done.

We encourage advisers to read the Law Reform Commission’s report. Learning how to recognise and identify the signs that your clients might be subjects of abuse by those around them are key to preventing financial loss. Recognise the right of the client to make ‘bad’ or ‘wrong’ decisions. Advisers should develop their own style of questioning for asking probing questions and learn how to refer matters. Maintain your professional standards and make thorough file notes of your questions, their answers, your advice and their intentions.

Rhett Das is a director of integrity compliance and a lawyer at Integrity Legal. Tania Lim is a compliance consultant at integrity compliance and a lawyer at Integrity Legal.

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