Domestic or family violence refers to violence, abuse and/or intimidation between people who are currently or have previously been in a ‘relevant relationship’.
These relationships may involve:
- Past or current spousal relationships regardless of gender or sexuality (including de facto relationships)
- Informal care relationships (including unpaid carers of people with a disability or a medical condition)
- Family relationships (including non-blood relatives or extended family)
Financial abuse is a common yet seldom recognized form of abuse.
It can be difficult to recognize for reasons such as:
- Some individuals viewing money as a private matter that shouldn’t be discussed
- Its subtlety, and progression over time
- It being acceptable in some cultures for one member to control the finances for the entire household
However, the effects of financial abuse can be devastating and far reaching; ranging from practical to psychological effects.
Everyone has a right to be safe from such abuse. It is important to be able to identify the signs and support clients who are experiencing such abuse.
This guideline is designed to help you to understand what financial abuse is, and recognise signs that a customer may be potential victims.
What is Financial Abuse?
Financial abuse is a form of domestic and family violence which occurs when an abuser uses money and resources as a means to gain power, and to control their partner or family member.
This may involve behaviors such as:
- Threatening, coercing re: assets or wills;
- Taking control of the person’s finances against their wishes and denying access to their own money;
- Abusing Powers of Attorney;
- Stealing goods, e.g. jewellery, credit cards, cash, food, and other possessions;
- Unauthorised use of banking and financial documents;
- Forged or unauthorised signatures on documents or cheques.
What are the Common Indicators of Financial Abuse?
It is hard to detect financial abuse without considerable knowledge of the victim’s financial and/or legal affairs. Fortunately, financial institutions and legal officials are well positioned to detect financial abuse.
Here are some common settings or circumstances which may be indicative of financial abuse:
Deviations from typical banking behavior
Unusual banking behavior may indicate financial abuse. This involves bank activity that is erratic, unusual, or uncharacteristic and bank activity inconsistent with what you know of the person’s abilities or interests.
For example, withdrawals from or transfers between bank accounts that an individual cannot explain or unusual/unexplained activity such as unreasonably large withdrawals. Other indicators may be bank statements and canceled checks sent to an address that is not an elder person’s residence.
Unusual financial situations
An indicator might be when checks uncharacteristically begin to lack adequate funds to cover them and/or when a client is in debt and does not know why. Financial abuse may be suggested by complaints from the elder person about once having had money but not seeming to have much anymore, or the sudden inability to pay bills.
Unusual legal transactions
Financial abuse can also be indicated with legal transactions. This may include the execution of legal documents or arrangements, such as powers of attorney, by an older person who is confused or who does not understand or remember the transaction. Other signs are suspicious or forged signatures on documents and changes in the older person’s property, titles, will, or other documents, particularly if the changes are unexpected, sudden, or favor new acquaintances.
A number of indicators may also be apparent if you are able to visit the home/residence of a person. For example, a disparity between living conditions and money. Such as the lack of substandard care, a decline in personal grooming, or an absence of clothing, food, or other basic necessities when an individual can afford them.
The Risk of Financial Abuse for the Elderly Population
Recent studies suggest that financial abuse — the illegal or improper use of an older adult’s funds, property or assets — is one of the most common forms of elder abuse. Although financial abuse may affect anyone, the elderly are frequent victims due to diminished physical or mental capacities.
Unlike other forms of abuse and neglect, financial abuse is more likely to occur with the tacit acknowledgment and apparent consent of the elder person, and is often difficult to detect and establish. Some forms of financial abuse may even seem like displays of affection, like a family member offering to take control of the finances to take the pressure off another, but is really an attempt to control their access to money.
Abuse of Power of Attorney
A power of attorney allows an individual to plan for the future and choose someone to manage a range of significant matters if they are unable to do so themselves in the future. This may include financial matters, medical treatment or living arrangements.
An individual can abuse the Power of Attorney for almost any financial purpose including:
- signing legally binding documents
- operating bank accounts
- paying bills
- buying and selling real estate
- managing investments
- collecting rent
Legal Obligations of the Power of Attorney
Attorneys have a legal obligation to act in the best interests of the individual, maintain separate accounts and records and avoid a conflict of interest.
Attorneys who act outside the scope of authority permitted by the Power of Attorney, misappropriate an individual’s assets or fail to act in the individual’s best interests are abusing their position.
Examples include situations where an attorney may:
- neglect paying for necessities on behalf of the individual;
- make decisions and take action without consulting the individual or, in the case of an incapacitated individual, fail to consult with those who are close to them;
- use the individual’s funds for their personal benefit;
- sell or transfer the individual’s assets for their personal benefit
Laws, terminology and processes around the power of attorney differ across states and territories.
Roadmap for Progress on Combating Financial Abuse
The spectrum of activity entailing financial abuse can reach far beyond individual sectors. Legal institutions, insurance companies, financial services, senior care facilities can unwittingly facilitate this abuse.
Financial abuse poses a risk not only to clients but industries as well. Inadequate measures to identify and/or counteract financial abuse can lead to reputational risk and a breakdown in client trust as well. While the risks posed by financial abuse can be large and varied, this also presents an opportunity for industry players to better assist clients. Effective measures to identify, counteract and stem the flow of such financial abuse, may serve a major source of differentiation, driving further customer/client satisfaction and company success.
Further blogs will outline tips on how you can play your part in preventing and investigating financial abuse on behalf of your customers.
Financial abuse is a common yet seldom recognized form of abuse.
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