CPD: Ethical practice in the face of financial elder abuse


Know the signs of abuse and responsibilities about elder abuse.

As Australia’s population ages, it is anticipated that the incidence of elder abuse will increase. This includes financial abuse, which needs to be identified and appropriately managed by financial advisers. This article, proudly sponsored by GSFM Pty Ltd, explores elder abuse and the ethical ramifications for advisers.

The 2023 Intergenerational Report devoted a chapter to Australia’s population, in particular its ageing profile. Life expectancies in Australia have been improving over time and will continue to do so. Life expectancy in Australia is among the highest in the world. Great news for many; however as the proportion of people aged over 65 steadily increases (figure one), the overall population of older people vulnerable to elder abuse increases accordingly.

A recent headline announced “‘Inheritance impatience’ driving rise in elder abuse”[1]. While there is a lot of focus on the coming intergenerational transfer of wealth as baby boomers pass away, organisations such as the NSW Ageing and Disability Commission are concerned about the impact of this on the already rising incidence of financial elder abuse; in 2022-23, the commission received more than 1,400 complaints of financial abuse, including exploitation, misused power of attorney and theft[1].

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, such as when school fees need to be paid, the younger generation is trying to enter the property market or mortgage stress is rife.

What is elder abuse?

Elder abuse is, of course, a global scourge. The global population of people aged 60 years plus is expected to more than double, from 900 million in 2015 to about 2 billion in 2050; consequently elder abuse is expected to increase[2]. One of the most widely quoted definitions of elder abuse is one that’s been adopted by the World Health Organization (WHO) which defines elder abuse as:

“A single or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person.”

Elder abuse takes several forms:

  • psychological abuse
  • physical abuse
  • financial abuse
  • social abuse
  • sexual abuse
  • neglect.

Elder abuse can have serious physical and mental health, financial, and social consequences. These can include physical injuries, premature mortality, depression, cognitive decline, financial devastation and placement in aged care facilities.

The form of elder abuse of greatest concern to financial advisers is, of course, financial elder abuse. There are a number of definitions for this form of elder abuse, including this used by WHO:

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

AFCA defines elder financial abuse as follows:

“When someone in a position of trust (the abuser) illegally or improperly uses and exploits the funds, property, or other assets of a known older adult for the profit or advantage of someone other than the adult.”

AFCA notes that financial elder abuse, like other forms of elder abuse:

  • occurs where the abuser is someone known and trusted by the abused
  • can be perpetrated against any older person, regardless of gender, means and background
  • often occurs in conjunction with other forms of abuse and controlling behaviour.

The Financial Services Council (FSC) defines elder financial abuse as:

“Any activity by an individual that seeks to use fraudulent, illegal, deceptive or otherwise improper acts or processes to advantage from the financial resources of an older or elderly individual.”

In this definition, advantage can include:

  • personal profit or gain
  • enabling profit or gain for a relative, friend, spouse or business associate
  • deprivation of the right of an older or elderly individual to benefits, resources, belongings or assets for any reason.

How prevalent is elder abuse?

The most recent report on elder abuse was released by the Uniting Church of Queensland in 2022[3]. Although the figures are not national, they can be seen as a proxy for national data.

Firstly, based on reported cases, the data indicates that elder abuse is steadily increasing (figure two). Secondly, many reported cases deal with two or more forms of elder abuse, in which psychological abuse is the most prevalent, closely followed by financial abuse (figure three).

What forms can elder financial abuse take?

Elder financial abuse can take many forms. Your experience as a financial adviser is likely to vary from experiences across other financial services such as banks or insurers. According to the FSC, an act of elder financial abuse includes any activity that seeks to undermine the rights of an elderly person for the financial gain or advantage of an individual.

In 2021-22, 1,428 cases of financial abuse were reported to UnitingCare; examples of the financial abuse reported include not allowing a person access to their money, pressuring them to sign over their house or other assets and misuse of an Enduring Power of Attorney (EPoA)[4] (figure four).

The most common forms of financial abuse were non-contribution (for example, living with the victim and not contributing towards expenses such as electricity or groceries), using the victim’s funds to pay the perpetrator’s bills and coercing the victim into gifting (figure five). The proportions of cases in which non-contribution and paying perpetrators bills were recorded had increased and in 2021–22 had overtaken coercing the victim into gifting as the most frequently reported forms of financial abuse[5].

The FSC provides a range of examples of the ways that elder financial abuse may manifest in the day-to-day interactions you may have with older clients. These include:

  • illegal or improper use of an elderly person’s assets, including physical assets (such as their home or property) and/or financial assets (such as pension payments, superannuation or cash at bank)
  • acquisition and misuse of control over an elderly person’s funds or assets through threatening or coercive means
  • acting as an agent for an elderly person’s financial affairs without formal appointment
  • committing an elderly person to financial contracts or commitments that are not in their best interests, such as informal loans made to family members or friends
  • coercion of an elderly person into appointing a Power of Attorney (POA) or changing their will.

What are the warning signs?

A client may not always disclose or even be aware of financial elder abuse. However, AFCA has identified some red flags for advisers to be aware of as potential indicators a client is experiencing financial elder abuse. These include:

  • fear, stress or anxiety expressed by your client
  • reluctance or confusion when talking about their financial situation
  • concern about missing funds or banking-related documents
  • inconsistent signatures on documents
  • lack of knowledge or understanding of their financial situation (particularly debts or services)
  • implausible explanations or confusion about what they are doing with their money, inability or reluctance to provide information about their accounts or financial situation
  • the involvement of a third party as a representative (especially where the representative is the primary conduit of information)
  • large, unusual, or erratic withdrawals or transfers without plausible explanation.

AFCA also notes a range of transactional red flags to be aware of. Client transactions on financial accounts or products can be an important indicator of elder financial abuse. Where you and your staff are familiar with a client’s routine transactions or their long-standing arrangements, you may in the ideal position to identify unusual or irregular account activity.

Such transactions could be used as triggers for follow-up action, verification or authorisation, in the same way some transactions trigger action against potentially fraudulent account activity. AFCA provides the following transactional red flags that may be accompanied by the client-facing red flags outlined above. Importantly, these transactions are considered red flags only where they represent a deviation from the client’s business-as-usual activity. This may include:

  • activity in previously inactive accounts
  • address changes on an account by a third party, or requests by the third party to send correspondence to them
  • new third-party requests on behalf of a client
  • increases in withdrawals, payouts or liquidity
  • transfers of assets or financial products to a new third party
  • changes in preferred operation of financial instruments following the appointment of a POA or legal guardian
  • underwriting of loans, purchases of new assets or new financial products.

Ignoring any red flags that present, whether in your client’s demeanour or transactions, could be construed as failing to act in the client’s best interests and a breach of the adviser Code of Ethics.

Powers of attorney

Both the FSC and AFCA note the potential for financial elder abuse where a client is represented by a family member or other party. Misuse of POA and Enduring POA instruments are among the most common ways in which elder financial abuse is committed according to the FSC. A POA appointment makes it easier for a perpetrator to engage in elder financial abuse through the use of rights inferred through the POA appointment.

This is not to suggest that the presence of a representative for an older client person is an indicator of financial elder abuse; however, it’s important that you consider the presence of red flags, as described above, in conjunction with a representative. These elements in combination may be sufficient cause for further investigation and, if warranted, escalation.

In fact, a failure to do so could be regarded as a failure to meet your obligations under standard two of the Code of Ethics, which requires you to act with integrity and in the best interests of each of your clients.

The FSC has identified the following types of transactions as common forms of elder financial abuse committed by adult children using their role as POA to access or preserve their inheritance:

  • improper trading in the title to the parents’ property
  • failure to sell assets or release funds needed by an elderly parent, with the goal to preserve their inheritance
  • adult children gaining control over inheritable property and exhausting estate resources to the disadvantage of elderly parents or other beneficiaries
  • adult children benefitting from carers payments without providing adequate caregiving services to the elderly parent.

Where there is misuse of POA rights to perpetrate elder financial abuse, it’s most commonly identified in situations where adult children – predominantly males – seek to deprive an elderly parent of their access to, or use of, financial resources. The following motivations for elder financial abuse have been found to underpin most reported cases.

  • where an adult child seeks to access money or assets they expect to inherit at some future time
  • to preserve assets they are likely to inherit when the elderly parent passes away
  • adult children who have a sense of entitlement to those assets because they have acted as the primary caregiver to their parent.

Ethics and financial elder abuse

Elder abuse can be 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 what constitutes elder abuse
  • 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 should 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.

AFCA notes that financial abuse does not only happen in situations where a person lacks legal capacity. Although 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.

Best practice guidelines

The following standards are specified by AFCA and, while many are more focused on the banking sector, where relevant AFCA expects financial advisers will follow comparable best practice. By doing so, you are much less likely to breach any of the standards of the adviser Code of Ethics (figure six).

  • Expectation that a financial firm talks to the elderly person separately and in private about the financial transaction. AFCA considers a conversation must be more than one question. A third party should not be present during this conversation.
  • When the customer is alone a financial firm should be willing to have a conversation with them about the reason for the financial transaction.
  • Financial firm employees should listen carefully to what the customer says.
  • Financial firm employees should discreetly discuss the financial transaction to test the credibility of the explanation; however, the conversation should not be an interrogation.
  • Financial firm employees should check the elderly person’s account records, account operating instructions and who is authorised to operate the account. If there is more than one account holder or person authorised to operate the account, the financial firm should contact the other account holder or authorised person before allowing the financial transaction to occur.
  • Where a POA is acting on behalf of the elderly person, check the POA to see if there is another attorney who can verify that the financial transaction is appropriate and not to the detriment of the elderly person.
  • Has a Guardian been appointed? If so, is the person accompanying the elderly person the Guardian? If not, the financial firm should take steps to contact the Guardian and not perform the financial transaction until it has been confirmed by the Guardian.
  • Financial firm employees should escalate their concerns to the appropriate senior person before conducting the financial transaction.
  • A financial firm may consider declining or delaying the transaction, for example by asking the customer to come back the next day if they still want to proceed.
  • Financial firm employees should feel free to ask the customer if there is another family member or friend the financial firm can talk to about the financial transaction before proceeding with it.
  • If there is no other family or friend, a referral to a relevant support service might be appropriate.
  • Financial firm employees should follow their internal policies and procedures whenever they see warning signs of financial abuse. If there are no policies and procedures in place, we expect the financial firm to explain why.


When it considers complaints that involve financial elder abuse, AFCA asks the financial firm to provide information including:

  • Contemporaneous customer notes about transactions where financial elder abuse was of concern. This should set out the circumstances giving rise to the concern and the steps the financial firm took to delay the transaction or take other preventative action.
  • Details of any conversations held with the customer.
  • If the financial firm did not discuss their concerns separately and in private with the elderly person, an explanation of why this did not occur.
  • Details of any specific preventative action taken.
  • Recollections of events from financial firm employees involved in transactions which are the subject of the complaint.
  • Copies of its internal policy and procedures in relation to financial elder abuse, and specific steps the financial firm took to comply with those internal policies and procedures.
  • Where applicable, contemporaneous notes or relevant documents showing the customer received a benefit from the transaction in dispute.

A failure to follow through on suspected cases of financial elder abuse will potentially breach several of the standards in the adviser Code of Ethics. AFCA’s findings may include that the financial firm is liable to reimburse losses to a client who is the victim of elder financial abuse. Such cases have included:

  • The client is unable to read due to blindness or illiteracy.
  • The customer’s signature on withdrawal or other transaction documents has been forged.
  • An unauthorised electronic transaction has been performed and liability is allocated to the financial firm under the ePayments Code.
  • The firm is on notice of the customer’s mental incapacity or undue influence.
  • The firm has assisted in a breach of trust.
  • The firm has itself taken advantage of a vulnerable elderly person so as to have engaged in unconscionable conduct.

How can you help your clients?

As with other forms of elder abuse, financial elder abuse is often perpetrated by someone known to, trusted and often loved by the victim. As well as working with your clients by following the best practice guidelines, you can direct them to receive further support from a referral agency. Each state has a community service that provides free and confidential assistance to older people experiencing elder abuse, including financial abuse.

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 a range of organisations that deal with elder abuse. For each, potential breaches of FASEA’s Code of Ethics will be identified.

Case study one: Undue influence

Peter and Helen were married couple in their 80s, and although not separated, were living in separate nursing homes due to support requirements. They had married later in life, and each had children with previous partners. The couple jointly held a number of investment funds that were managed by their financial adviser Luke, an authorised representative of ACME Financial Advice.

In 2017, they signed a document providing Helen’s daughter Rachel and Peter’s son Matthew with financial Power of Attorney. This included authority for online access to view investment statements. In July 2020, the applicant’s daughter rang ACME Financial Advice to report suspected unauthorised transactions on the joint account by Matthew.

Five days later, Matthew took his father in his wheelchair to see financial adviser Luke. Peter closed the joint investment account he held with Helen and redeemed the investments. He instructed Luke to transfer the funds, totalling nearly $175,000, into a bank account in his name only. This was done without Helen’s knowledge.

Helen said Luke should not have allowed Peter to close their joint investment account and transfer the funds into his name without her knowledge or consent. The dispute was referred to AFCA, which found that Luke’s notes had considered whether Peter had capacity to conduct the transaction.

Despite the file note, AFCA found Luke should have made further enquiries of Peter, in the absence of his son, before closing the account, selling the investments and transferring the funds. He should have also contacted Helen as a joint signatory to the investments. Had he done so, Helen would not have consented to the transaction.

AFCA concluded that Luke and ACME Financial Advice 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 80s, 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, AFCA determined both adviser and financial firm did not comply with good industry practice to protect the applicant from potential financial abuse. Luke was required to transfer half the funds, plus interest, into an account nominated by Helen.

Luke failed his elderly client and potentially breached the following standards of the Code of Ethics:

Case study two: Misuse of POA

Barbara is in her early 80s and a client of ACME Financial Planning. A few years ago, Barbara’s son and daughter established a joint EPOA should their mother require assistance and stewardship in her later years. Barbara’s financial adviser Maggie is aware of the POA and has met with both children.

Despite a recent stroke, Barbara’s mental acuity remains strong. However, she’s no longer able to drive and finds most forms of travel difficult. As a result, her daughter Chloe has become her default carer. Chloe has moved from full time to part time work so she can care for her mother.

Chloe contacted Maggie and asked her to redeem a managed fund investment valued at $65,000. She explained that it would be used to make some modifications to Barbara’s home to make it safer and more comfortable for her to continue to live in her own home.

Maggie called Barbara at a time she knew Chloe would be working. She wanted to ensure that Barbara was aware of this request, its purpose and quantum. Barbara was well aware of the building works and had the quotes to hand. It transpired that the building works had been quoted at $50,000. Chloe had intended to keep the remaining $15,000 as ‘payment’ for her services as a carer, without her mother’s knowledge or approval. Maggie made a file note of this issue in case the situation arose again at a time she wasn’t present at the firm.

Although AFCA acknowledges that employees of financial firms are “not expected to be detectives”, it is their duty to exercise reasonable care and skill, which includes an obligation to question the client’s authorisation of a transaction. This includes circumstances where there’s a possibility that a client is being financially abused or the use of funds is not consistent with the customer’s wishes or for their benefit.

Through her actions, Maggie acted in Barbara’s best interests and did not breach the Code of Ethics. However, had she simply actioned Chloe’s request, she would have potentially breached the following standards: 

Case study three: Coercion

Kaye had been widowed for seventeen years. She and her husband had invested well over the years and her financial adviser, Jane from ACME Financial Advice, had looked after her financial interests for a number of years.

At their annual review meeting two years ago, Kaye told Jane 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. That way she would be closer to her daughter and in the event she needed assistance or care, it was readily available.

Jane was surprised as Kaye’s daughter lived a couple of hours away. Jane knew Kaye was active in her community, loved her regular times at the local bowls club and was known to be a dab hand with bridge. As well as contributing the proceeds of her property sale to the new home, Jane later redeemed some investments to pay for the fit out of her granny flat.

Seven months after the move, Jane received a tearful call. Kaye and her daughter had fallen out; Jane had missed her community and had not found her place in the new location. She wanted to return to her community but, when she requested the money to do so, was told she had no right. Despite the money from the sale of her property and investments, she 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 Kaye in a vulnerable position. It’s not an uncommon scenario – the Uniting Care study found 5.4 percent of financial elder abuse cases involved the victim investing money in the perpetrator’s property.

Because Jane recognised the situation was unusual and unexpected, she failed her elderly client, which resulted in her being in a financially vulnerable position. Jane potentially breached the following standards in the Code of Ethics:

For the financial advice industry to thrive, it must reclaim trust and foster professionalism. Upholding ethical standards will cultivate trust among Australia’s consumers, bolstering their confidence in seeking financial guidance and advice.

As Australia’s population ages, a corresponding increase in elder financial abuse is anticipated. The FSC emphasises that the client-financial services provider relationship is pivotal in identifying such abuse. Established relationships empower financial service providers to discern actions or behaviours that are inconsistent with a client’s character, prompting further investigation.

This underscores the significance of the relationships maintained with clients. Initiating conversations about elder abuse, especially financial elder abuse, as clients approach retirement age is advisable. While having legal instruments like a will, POA, and guardianship in place is good practice, it’s equally important to be familiar with appointees, ensuring all parties understand their obligations.

In alignment with AFCA’s requirements, all advice practices should implement clear policies and procedures to identify and address elder abuse cases. This commitment ensures ongoing adherence to ethical obligations and acting in the best interests of all clients. Adhering to the Code of Ethics, incorporating it into daily practices, is a vital component in the journey to restore the industry’s positive reputation and reaffirm its significance in ensuring the financial security of all Australians.



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[2] World Health Organisation, https://www.who.int/news-room/fact-sheets/detail/abuse-of-older-people
[3] UnitingCare, Elder Abuse Statistics in Queensland: Year in Review 2021–22
[4] Ibid
[5] Ibid

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