CPD: Ethics and financial abuse – responsibilities and strategies for financial advisers

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Statistics show up to 10 per cent of older Australians experience elder abuse.

It’s hard to imagine, but statistics show up to 10 per cent of older Australians experience elder abuse. This may be financial, legal, emotional, physical or plain neglect. Sadly, much of this abuse hidden in families, where the majority of perpetrators lurk, and victims don’t know how to stop it. Financial abuse of elders is on the rise; whether it is longevity causing intergenerational wealth transfers to occur much later in life (if at all), the spiralling cost of housing or technology making such abuse easier, it is something all financial advisers need to be aware of.

In this forth ethics article, sponsored by GSFM Pty Ltd, elder abuse and the ethical ramifications for advisers is explored.

Financial abuse may not leave physical scars, but it can have ramifications that affect the victim for remainder of their days and sometimes, break up a family unit. While financial exploitation is not new, according to the Australian Institute of Family Studies it’s the most common form of elder abuse.

There’s a perfect storm on the horizon. The baby boomers are reaching retirement and can expect to live – and need to fund – 20-30 years. The housing affordability crisis sees their children and grandchildren struggling to pay off huge mortgages – if, of course, they can get into the property market at all. Meanwhile, if there’s any inheritance left to get, people aren’t likely to receive it until they’re in their sixties or later. The cash strapped taking advantage of the perceived well-heeled – it’s not a new story but it’s one that’s seeing Australia’s vulnerable older generations at increasing risk.

What is elder abuse?

Elder abuse can take many different forms; physical, emotional, sexual, financial, social and neglect. Financial abuse, along with neglect, are the two most common forms of elder abuse[1]. Age discrimination or estranged relationships with relatives do not constitute elder abuse.

Unfortunately, in most cases, elder abuse is committed by those known to the victim; it’s generally perpetrated by a trusted person. Some of the risk factors for elder abuse include:

  • Situations where the carer experiences high levels of stress; financial difficulties, ill health, unemployment or battles with substance abuse
  • Cognitive impairment, such as dementia, or physical confinement means the older person is unable to stop or report the abuse
  • Social isolation as a result health issues, location, cultural or language barriers
  • The elderly person is dependent on the perpetrator for support; this could be physical, emotional or social support.

Social isolation

According to a 2018 study by Uniting Care[2], social isolation has been identified as a high risk factor for elder abuse. Older adults are at greater risk of becoming socially isolated due to a range of physical, social and structural factors; these can increase their vulnerability and decrease the likelihood of the abuse being reported. In some instances, the social isolation may be a factor of age, mobility and culture – in others, the result of deliberate actions by the carer.

The study found that in some situations, the perpetrator may be the only social connection that the older person has. Therefore, despite the abuse, the victim may be reluctant to take action that may jeopardise the relationship.

Intergenerational wealth transfer

The transfer of wealth from one generation to another is a common expectation and has buoyed the bank balance of several generations of Australians. It’s typically been used to pay out mortgages, boost investment funds or cover school or university fees. Times however, they are a changing.

Thanks to better lifestyles, improved nutrition and medical breakthroughs, the life expectancy of Australians in retirement has almost doubled in the last 150 years. In fact, since compulsory superannuation was introduced in Australia in the early 1990s, Australian retirees have gained an extra decade of longevity[3].

Longevity strains the notion of intergenerational wealth transfer in two ways. Firstly, retirees need to fund more years in retirement, eating into the funds that were once passed on to children and grandchildren. Secondly, inheritances come too late in life for many, past the time they would be most useful; i.e. when school fees need paying or the younger generation is trying to enter the property market.

Uniting Care’s research shows that adult children are forced to wait an average of 10-12 years longer for an inheritance than fifty years ago, which may lead to ‘inheritance impatience’. This coupled with an expectation of an intergenerational wealth transfer may lead to a sense of entitlement and perceived co-ownership of parental assets. In fact, the chairman of Australia’s National Legal Aid, Dr Graham Hill, has publicly stated that spiralling house prices are fuelling the rising levels of elder financial abuse in Australia[4].

This is an issue that’s more problematic when the child holds an Enduring Power of Attorney (EPoA) for their parent/s.

Economic factors

A range of economic factors might increase the risk of elder abuse – notably, financial abuse. These factors may include unemployed children or grandchildren, housing affordability (to both buy and rent), and rising education costs.

These pressures sometimes result in older people being coerced by adult children or grandchildren to allow them to move in and live rent free, borrow money, fund or contribute towards a deposit, assist with mortgage repayments or even buy them a home. In some cases, the older person has been convinced to sign over their own home so it can be used as collateral for a mortgage.

In 2017, it was reported that the ‘Bank of Mum and Dad’ was the fifth largest home loan lender, providing $65.3 billion in loans to help children buy houses[5]. Uniting Care found 2.1% of financial abuse cases reported to its Helpline in 2017-2018 involved the victim transferring the title of their home to the perpetrator.

Financial elder abuse

The World Health Organisation defines the financial abuse of an older person as:

The illegal or improper exploitation or use of funds or other resources of the older person.

The definition includes acts with adverse outcomes committed by people known to and trusted by the victim, as well as acts perpetrated by strangers and by institutions. Older people are particularly vulnerable to financial abuse because they often depend on family and carers for social contact and daily care. Research has repeatedly shown these are the most likely perpetrators of financial elder abuse.

Illegal or improper use of an older person’s funds or resources might include:

  • Mismanagement of their funds or investments
  • Theft of money or possessions
  • Taking control of their finances without permission
  • Taking control of their finances with permission but misusing the funds
  • Pressuring relatives for early inheritances
  • Pressuring the older person to accept lower-cost or lower-quality services, such as aged care, to preserve more financial resources to be available as an inheritance
  • Carrying out unnecessary work or overcharging for services
  • Living with the older person and refusing to contribute money for expenses
  • Forging or forcing an older person’s signature
  • Promising long-term care in exchange for money or property and not providing the promised care
  • Convincing an older person to be a guarantor for a loan or business where the benefit of the loan is for someone else
  • Persuading the older person to change the terms of an existing contract, the clauses in a Will or their EPoA through deception or undue influence
  • Convincing the older person to sign over the title/s of property they own.

Although EPoAs are often used to protect older people, particularly those experiencing cognitive declines, cases of financial elder abuse have included the misuse of control using an EPoA.

As well as deliberate financial abuse, a Monash University[6] study found unintended financial abuse also exists. This can be defined as inadvertent or uninformed financial mismanagement or neglect of financial assets. This results in the older person being deprived of the benefits they should have derived from those assets. For example, an investment property allowed to run down; over time, the rental income will decline, and capital expenses increase.

Enduring Powers of Attorney

As people age, many of them sensibly create a power of attorney in preparation for when they will require assistance to manage their finances. A Power of Attorney is a legal document which allows one person to act on behalf of another, generally in relation to financial or property decisions. It ceases to be effective once the person who has made it dies.

An Enduring Power of Attorney is an important tool in the event that a client loses the mental capacity (legal capacity) to manage their own affairs as they age. It’s generally considered to be important for estate planning purposes, as it allows the attorney to act on the behalf of the Grantor in the event that the Grantor loses mental capacity.

There are a variety of requirements for a valid Power of Attorney, including the need for both the Grantor (the older person) and the attorney to be adults, of sound mind and with legal capacity (for example, they cannot be bankrupt). In addition, the signature of the Grantor must be witnessed by someone specified in the legislation; the person named as the attorney must not be the witness.

Despite these legalities, the main culprits of financial abuse tend to be the attorneys chosen by the victims themselves; often their own children or someone they have known and trusted for a long time.

Elder abuse by the numbers

Uniting Care’s 2017-2018 study examined victims and perpetrators of elder abuse. Not surprisingly, children are the most likely perpetrators. Interestingly, biological sons represented the most common alleged perpetrators, although when it came to in-laws, daughters-in-law were more likely to be reported as perpetrators. In the cases where the perpetrator was recorded as spouse/partner, 16.2% of these were ex-spouse/partners (figure one).

 

 

Although elder abuse tends to affect both men and women proportionately, Uniting Care’s statistical analyses revealed that female victims were significantly more likely to experience psychological abuse or sexual abuse, while males were more likely to experience financial abuse.

 

 

When it comes to perpetrators of financial abuse, men are somewhat more likely to perpetuate the abuse. However, as shown in figure three, females are more likely to abuse men and men, more likely to abuse women.

 

 

Financial abuse was the most commonly reported abuse type in Uniting Care’s 2017/18 study, with 68.7 percent of elder abuse victims having experienced financial abuse. Interestingly, 46.9 percent of these cases also involved psychological abuse, which has been found to often occur in tandem with financial abuse and may facilitate financial abuse.

For example, the perpetrators may threaten to sever contact with the older person and socially isolate them or could refuse access to grandchildren if the older person is reluctant to provide the perpetrator with the assets they desire.

The study recorded data coming in on a telephone helpline, Elderline. The call recipients can record factors that have facilitated the financial abuse. As a result, the study was able to identify a range of factors that may increase the risk of financial abuse, for both victim and perpetrator. In this edition of the Year in Review, the financial risk factors are only reported for cases where financial abuse was identified (figure four). Risk factors were identified for 79 percent of victims of financial abuse and 67 percent of perpetrators.

 

 

Methods of financial abuse

As illustrated in figure six, the most commonly reported method of financial abuse was ‘non-contribution’, a situation where the perpetrator lives with the victim and fails to contribute to living costs. The third most common abuse includes situations where the EPoA has been used by the perpetrator to withdraw sums of money which are used to pay the perpetrator’s mortgage, buy a new car or pay their own bills.

 

 

Abuse in consumer and social relationships

Although most financial abuse is perpetrated by those close to the victim, abuse does occur in social or commercial relationships. In fact, financial abuse is the second most prevalent form of elder abuse among social or commercial relationships (30.1 percent) second only to psychological abuse (40.2 percent).

Financial abuse was found to be highest in consumer issues cases (60.0 percent), suggestive of scams and situations such as an older person being pressured by a salesperson or tradesman to buy or agree to something they don’t want or need.

Warning signs

Financial abuse is not always immediately obvious. The perpetrator will cover their tracks as much as possible, and, for a range of reasons discussed, the victim may be unaware of the abuse or unwilling to address it. As such, it’s critical that financial advisers can identify the warning signs. Sometimes, abuse may occur through innumerable smaller transactions and be hidden in plain sight. Importantly, trust your intuition – if you are suspicious, you should review the situation.

Some warning signs that a client may be experiencing financial abuse include:

  • They have allowed someone else to control their access to bank accounts, credit and debit cards or other money; where the client isn’t regularly on top of the transaction history is a major red flag
  • Family members move in, even if to ostensibly ‘care’ for the client, but is not contributing financially; where this is causing the client’s expenses to increase markedly, or negatively impacting their standard of living, should be of concern
  • Your client’s bills haven’t been paid, even though someone else is supposed to be doing this for them
  • Your client is pressured to invest in a private business or scheme with returns that sound too good to be true
  • Your client guarantees or takes out a loan for a family member
  • You client has to get permission from a third party to spend their own money
  • Someone is selling (or threatening to sell) your client’s property without their permission
  • Your client sells their property and uses the funds to ‘buy’ into a child’s property or granny flat on site without any contractual arrangement
  • Your client makes an EPoA or new will without informing you
  • The client loses confidence in their ability to make financial decisions and indicates this is a result of being made to feel incompetent by others.

Financial advisers – responsibilities

Elder abuse is an ethical minefield. You may have older clients at risk of financial abuse and although it can be hard to identify – and you may risk upsetting a client – it’s important to act on any suspicious activity. After all, it’s hard to meet the basic ethical requirement – to always act in the client’s best interests – if you don’t act to protect your clients from abuse.

Ethical considerations include:

  • Avoid conflicts of interest, particularly in situations where two generations of a family are clients
  • Avoid contributing to the perpetration of unlawful acts
  • Ensure all clients are well informed; as clients age, ensure they understand elder abuse as
  • Ensure your client understands the advice, and has capacity to act
  • Be respectful – after all, just because a client is old does not mean they’re not able to make valid financial decisions
  • Your client’s best interests come first.

But what if the victim is not your client?

If you become aware that a client may be perpetrating financial abuse, you still need to report it, even if the victim is not your client. As well as being an ethical imperative, in many cases it may well also be a legal imperative. An example would be if you were to see a client borrow against their parents’ home and invest the proceeds property, shares or other investments.

Strategies to deal with a client experiencing financial abuse

If you suspect a client may be a victim of financial abuse, there are several steps to take. Firstly, discuss the situation with them and endeavour to learn:

  • Who is responsible for the abuse?
  • What is the extent of the abuse?
  • Which assets have been affected?
  • Has the client has consented to the actions taken by the perpetrator?
  • Does the client have any dependencies on the abuser – for example, are they responsible for their care?

Importantly, you need to determine whether your client is fully aware of what’s happening.

Secondly, contact important third parties, such as the older person’s banks or other financial institutions. Flagging potential financial abuse with third parties may enable you to limit the extent of the abuse.

Finally, consider a legal response to the abuse. If you are suspicious that financial abuse has occurred, immediate action to limit any further damage should be taken.

It’s important to reassure your client that help is available. Figure seven lists a range of organisations that can provide help to older Australians in need of assistance or advice.

 

 

The Financial Ombudsman Service (FOS) and its successor organisation, the Australian Financial Complaints Authority (AFCA), believe that vulnerability combined with a detrimental impact on an elderly person can help to identify improper conduct. Detrimental impact transpires where an elderly person is left in a worse financial position than before the improper conduct occurred.

Improper conduct may include:

  • Intimidation
  • Deceit
  • Coercion
  • Emotional manipulation
  • Physical or psychological abuse
  • Undue influence
  • Empty promises.

To be improper, conduct doesn’t need to involve malicious intent; an abuser may have a mistaken sense of entitlement.

Examples of improper conduct a financial adviser may witness could be:

  • An abuse of trust, where a trusted third party persuades the elderly person to act in a way contrary to their interests
  • Conduct resulting in personal gain for a third party in a formal position of trust giving rise to fiduciary duties, such as the holder of an EPoA.

AFCA notes that while vulnerability can be related to incapacity, it can also be due to dependence on a third party. Therefore, it’s important for advisers to distinguish an informed decision made by an elderly client with the capacity to make a financial decision, from those whose decisions are subject to undue influence from a third party.

While cognitive incapacity can increase the risk of financial abuse, vulnerability may be increased when an older person has reduced mobility, vision or hearing, or has any physical dependence on another person for care or assistance with tasks, including banking.

FOS identified a number of ‘red flags’ that may indicate financial abuse of a vulnerable elderly person – these are warning signs that indicate the need for enquiry, caution and investigation. The red flags potentially visible to financial advisers and/or their employees might include situations where the client:

  • Engages in financial activity that is unusual, erratic or uncharacteristic
  • Is accompanied by a new acquaintance to make a large or unusual withdrawal of cash
  • Is accompanied by a family member or other person who seems to coerce them into making transactions
  • Is not allowed to speak for themselves, or the other party does all the talking
  • Starts to appear fearful or withdrawn, particularly in the company of their caregiver or child
  • Adds a person to their account, which is swiftly followed by the balance being transferred out
  • Does not understand, or is not aware, of recent transactions
  • Appears confused about what they are doing with their own money
  • Suddenly registers for internet banking when previous contact has always been in person
  • Has unpaid bills that they should be able to afford to pay
  • Indicates there are missing funds, documents or they’re no longer receiving mail, such as bank statements

You should also look out for transactions by a caregiver that do not seem to be in the interests of the customer, such as a holiday. Many of these factors were evident in elder abuse cases reviewed by FOS.

What’s expected of financial advisers?

There are a number of steps a financial adviser, or their client-facing employees, may need to take if they suspect financial abuse. Importantly, you need to recognise that a dependent elderly person will be unlikely to respond meaningfully or openly to questions about their finances and specific transactions if a third party is present.

If the situation ends up in dispute resolution, taking the following steps in response to ‘red flags’ will affect the outcome of the dispute[7]:

  • FOS expects a financial adviser to talk to the elderly person in private about the financial matters and/or transactions; notably, FOS considers a conversation to be more than one question
  • A third party should not be present during this conversation
  • The adviser and employees should listen carefully to what the customer says
  • FOS expects employees to discreetly discuss the financial transaction to test the credibility of the explanation; importantly, the conversation should not be an interrogation
  • The adviser’s employees should check the elderly person’s account records, account operating instructions and account authorisations. Where there is more than one account holder or person authorised to operate the account, the adviser should contact the other account holder or authorised person before allowing any financial transaction to occur
  • Where a Power of Attorney (POA) is acting on behalf of the elderly person, check the POA documentation to ascertain whether there’s another attorney who can verify any financial transaction is appropriate and not to the detriment of the elderly person
  • The adviser should ascertain whether a Guardian has been appointed and, if the elderly client is accompanied, is that person the Guardian? If not, the adviser should take steps to contact the Guardian and not perform any financial transaction until it has been confirmed by the Guardian
  • The adviser or their employees should escalate their concerns to an appropriate senior person before undertaking any financial transaction.

If the adviser, or one of their employees, does not have a level of comfort that a financial transaction is in the best interests of the elderly client, they can consider:

  • Declining or delaying the transaction; for example, they could ask the client to return the following day if they still want to proceed
  • Asking the client whether there’s another family member or friend the adviser/employee can discuss the financial transaction with before proceeding with it
  • Referral to a relevant support service.

All advisory practices should have internal policies and procedures for dealing with financial abuse; these should be followed whenever they see warning signs that abuse may be occurring.

Adviser liability

According to FOS, an adviser may be liable to reimburse losses to a client who has been the victim of financial abuse under a number of legal and equitable principles. These include:

  • Where a client is unable to read due to blindness or illiteracy
  • The client’s signature on transaction documents has been forged
  • An unauthorised electronic transaction has been performed and liability is allocated to the adviser under the ePayments Code
  • Situations where the adviser is aware of a client’s mental or cognitive incapacity
  • Situations where the adviser is aware the client may be vulnerable to, or under, undue influence
  • Where an adviser has assisted in a breach of trust
  • Where an adviser has taken advantage of a vulnerable elderly person and engaged in unconscionable conduct for their own benefit, or the benefit of others.

Case studies

The following case studies are based on real events; however the names of people and organisations have been changed, and some details altered. The case studies have been drawn from FOS and a range of website discussing elder abuse. For each, potential breaches of FASEA’s Code of Ethics will be identified. 

 

Case study one: Signs of undue influence

Bob and Mary were married couple in their 90s, although not separated, were living in separate nursing homes and held investment funds in a joint account with their financial adviser, John, an authorised representative of ABX Financial Planning. In 2015, they signed a power of attorney providing Mary’s daughter and Bob’s son with authority to online access to view investment statements only. In April 2017, the applicant’s daughter rang ABX Financial Planning to report suspected unauthorised transactions on the joint account by the husband’s son.

Five days later, the son took his father in his wheelchair to see John. Bob closed the joint investment account he held with Mary and redeemed the investments. He instructed John to transfer the funds, totalling nearly $140,000, into a bank account in his name only. This was done without Mary’s knowledge.

Mary said John should not have allowed Bob to close their joint investment account and transfer the funds into his name without her knowledge or consent.

The dispute was referred to FOS, which found John’s notes had considered whether Bob had capacity to conduct the transaction.

However, FOS found John should have made enquiries of Bob, in the absence of his son, before closing the account, selling the investments and transferring the funds. If they had done so, Mary would most likely not have consented to the transaction.

FOS concluded ABX Financial Planning did not exercise appropriate care and skill in response to the following ‘red flags’:

  • the unusual nature of the disputed transaction
  • the husband who conducted the transaction was in his 90s, in a wheelchair and accompanied by a person who the adviser had been notified may have not been acting in the best interests of both accountholders.

Consequently, FOS determined ABX Financial Planning did not comply with good industry practice to protect the applicant from potential financial abuse, and John was required to transfer half the funds, plus interest, into an account nominated by the applicant.

Breaches of FASEA’s code of ethics

John from ABX Financial Planning has failed his elderly client and potentially breached the following standards in FASEA’s Code of Ethics:

 

Ray visited his local financial adviser, Luke at L&L Partners, with a new acquaintance, Olive. There he completed a third party operating authority that allowed Olive to operate his personal accounts, including a cash fund. He advised Luke that they intended to withdraw money from his cash trust. Within a few days, Olive transferred $50,000 from Ray’s cash trust to her personal account.

Case study two: Granting third party access to accounts

One month later, Ray was admitted to hospital and was subsequently declared incompetent. Eleven weeks later a guardian was appointed to administer Ray’s financial affairs. Olive kept the $50,000 cash withdrawn from Roy’s personal account.

Rays’ guardian lodged a dispute with FOS, claiming:

  • Ray would have been incapable of consenting to the account operating authority and cash withdrawal at the time
  • Ray was induced by Olivia to change the account operating authority, which enabled her to subsequently withdraw the $50,000
  • The adviser should have questioned Ray about the size of the withdrawal, as it was inconsistent with the previous account activity
  • The adviser should also have questioned Ray’s capacity and prevented the transactions.

FOS considered the dispute and found Luke did not comply with good industry practice in relation to the cash withdrawal because Ray appeared elderly and dishevelled, and he provided the authority which enabled a large withdrawal from his account.

Luke was required to refund $50,000 to Ray because he failed to discuss the third party authority and its implications, as well as the intended transaction, with Ray separately from Olive. In addition, FOS believed he should have taken steps to identify and protect Roy from potential financial abuse.

Breaches of FASEA’s code of ethics

Luke failed to protect his elderly client from financial abuse and potentially breached the following standards in FASEA’s Code of Ethics:

 

Case study three: Coercion

Beverley had been widowed for fourteen years. She and her husband had invested well over the years and her financial adviser, Susan from Richmond Financial Advice, had looked after her financial interests for a number of years.

At their annual review meeting two years ago, Beverley told Susan she was going to sell her home and contribute the proceeds to her daughter’s purchase of a new home. She was to have her own granny flat on the property, and she would live there.

Susan was surprised as the daughter lived a couple of hours away and she knew Beverley was active in her community. She loved her regular times at the local bowling club and was known to be a dab hand with bridge. As well as contributing the proceeds of her property, Susan later redeemed some investments to pay for the fit out of her granny flat.

Some months after the move, Susan received a tearful call. Beverley and her daughter had fallen out because Beverley missed her community and wanted to return. When Beverley requested money to return to her former locale, her daughter told her no. Despite contributing the money from the sale of her property and investments, Beverley was not listed on the Title Deed, nor was her financial contribution recorded elsewhere.

Although she had some investments, it was not enough for her to set up home, leaving Beverley in a vulnerable position. It’s not an uncommon scenario – the Uniting Care study found 2.2% of elder financial abuse cases involved the victim investing money in the perpetrator’s property.

Breaches of FASEA’s code of ethics

Susan from Richmond Financial Advice has failed her elderly client, which resulted in her being in a financially vulnerable position. Susan potentially breached the following standards in FASEA’s Code of Ethics:

 

Case study four: Malpractice

Peter and Jane had been clients of Willowglen Financial Planning for many years. When their trusted adviser William retired, their account was taken over by his son Marc. Because they’d had such a long and fruitful relationship with William and trusted him implicitly, they transferred this trust to his son.

After a year of looking after their financial matters, Marc contacted Peter and told him he had a great strategy to boost their retirement income. Of the two of them, Jane was the more financially savvy and more conservative investor. She recognised their retirement savings had to last them a long time. Peter had experienced two minor strokes and was showing signs of cognitive failure.

The investment Peter was invited to review was a property scheme he was told ‘could not fail’. Peter knew their beachside suburb was booming and property development was going crazy. Marc invited him into the office and showed him a dazzling array of glossy brochures and pages of financial projections, which, of course, including dizzying returns.

Marc explained that this was a once in a lifetime opportunity, there were limited investors able to take advantage of it and that he had to act fast to secure an investment in the scheme. He did not disclose he was one of the developers, nor that his business partner in the development had a history of failure and bankruptcy.

Peter was convinced to invest there and then. He signed over $100,000 from the couple’s cash account and completed the investment paperwork. Marc had kindly prefilled it, he simply had to sign his name.

Jane was not happy when she learned what he’d done. She contacted Marc but was assured it would be the best decision of their lives – and also, that there was no cooling off period, so there was nothing she could do.

Fast forward 18 months and the property should have been reaching completion; however, it remained a hole in the ground, surrounded by lopsided fencing. Nothing had happened there for months.

Despite regular entreaties for an explanation, Marc went very quiet. They then had a letter from Willowglen informing them he had left the business and introducing their new adviser. They approached the firm to see what could be done about their investment and were told ‘nothing’. Marc had left no files – the only evidence of their investment were some glossy brochures and a letter acknowledging their investment, signed by Marc.

Jane sought legal help; the money Peter had signed over was not an insignificant portion of their retirement funding.

Breaches of FASEA’s code of ethics

Marc took advantage of his elderly clients, deliberately targeting the most vulnerable. Marc potentially breached the following standards in FASEA’s Code of Ethics:

 

Elder abuse is an ethical minefield for advisers. It is critically important advisers are aware their elderly clients understand the advice or have appropriate measures in place to manage their financial affairs. Advisers also need to be sure that the person managing their affairs is acting in the client’s best interests and not using their position to commit financial abuse. It can be a fine line; however, as identified earlier in this article, financial abuse is a growing segment of elder abuse and there are a range of economic pressures that might lead younger generations to pressure or take advantage of their elders. All advice practices should have clear policies and procedures in place to identify and manage cases of elder abuse; this will ensure they act in the best interests of their clients and meet their ethical obligations.

 

 

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[1] www.relationships.org.au
[2] Uniting Care, Elder Abuse Prevention Unit Year in Review 2017-18
[3] The role of home equity in retirement funding, Household Capital, February 2019
[4] http://www.intheblack.com/articles/2018/02/28/elder-financial-abuse-inheritance-impatience
[5] https://mozo.com.au/home-loans/articles/bank-of-mum-and-dad-the-fifth-biggest-home-loan-lender-report-2-17
[6] Protecting Elders’ Assets Study, Monash University, June 2009
[7] The FOS approach to elder financial abuse, Financial Ombudsman Service

 

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