Responding to the financial abuse of older people - Loddon ...

paragraph is directed more towards physical access to services and does not directly
address the issue of abuse or impose positive obligations on banks to address that issue.
Although the Code does not currently address the issue of abuse directly, there is an
argument (which we note for completeness but do not agree with) that the issue of abuse
is addressed by implication on account of paragraph 6 of the Code, which could be
construed as requiring (or at least providing a basis for) the reporting of abuse by banks
to relevant authorities.
Our conclusion does not mean that banks may not be otherwise required by the Code
to address the issue of abuse, only that no specific positive obligations are imposed by
the Code. The Code does contain general provisions which may sometimes be relevant
in contexts involving abuse, in particular the obligation on the part of banks which have
adopted the Code to:
(a) act fairly and reasonably (para 2.2);
(b) comply with all relevant laws relating to banking services (para 3.1) (e.g. a bank may
be under a duty to investigate an apparently valid mandate where a withdrawal is
made by an elderly customer who is accompanied by and directed and influenced
by a carer or family member); 14
(c) exercise the care and skill of a diligent and prudent banker before offering or giving
a person a credit facility (or an increase in a credit facility) (para 25) (e.g. a bank may
not be exercising the requisite level of care and skill where it lends to an elderly
customer in circumstances involving abuse where the customer has limited capacity
to repay the loan); and
(d) refrain from accepting a person as a co-debtor under a credit facility where it is clear,
on the facts known to the bank, that the person will not receive any direct
benefit under the facility (para 26) (e.g. an elderly person is made a co-borrower
in circumstances where the direct and only benefit of the loan is received by the
elderly person’s child).
However, the above provisions apply far more widely than just in cases involving abuse.
As a result, the presence of those provisions in the Code does not specifically alert
bankers of their obligations, nor elderly customers of their rights, in scenarios
involving abuse.
In conclusion, although the Code does not impose any specific positive obligations on
banks which have adopted the Code to identify and report instances of abuse:
(a) it reinforces existing legal obligations on banks which may be triggered by instances
of abuse (for example, notice of undue influence); and
(b) some of its broader standards (such as para 2.2) may potentially be expanded
to also address issues involving abuse.
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