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

suspicious transaction. These terms are especially useful in situations where a
suspicious carer of the customer (who may also be a signatory to the account)
withdraws money without the elderly customer being present. The terms would
allow the bank time to contact the elderly customer to verify the transaction and
remove any risk the bank may have of breaching its duty to carry out the
customer’s mandate.
(b) Vulnerable customers are often not aware of their vulnerability.
Educating elderly customers of:
(i)
(ii)
the risks of possible abuse;
the assistance that is available (such as the OPA); and
(iii) information on how the bank is or could help prevent abuse
would not only reduce the risk of abuse occurring but will also assist the bank
in obtaining consent to more effectively manage suspected abuse.
(c) Educating staff who have direct contact with vulnerable customers on:
(i)
(ii)
how to identify and assess the signs of potential abuse;
the resources available to assist in assessing abuse;
(iii) the resources available both within the bank and externally that may
assist the customer in the event of suspected abuse; and
(iv) the process and procedures for handling suspected abuse.
8.9 Conclusion
Whether a bank’s duty to inquire on suspicion of abuse outweighs its duty to carry out
a customer’s mandate depends on the circumstances of each case. However, in general,
a bank can assume that it is dealing with honest people unless there are contrary
indications but a bank is not entitled to ignore any such indications.
Where a representative of a customer operates an account or signs cheques, the bank
is not required to verify the signature or the validity of the status of the representative
but, if it does not complete such verifications, the bank risks being unable to debit the
customer’s account if the representative is not authorised by the customer. It is required
under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) to
verify the identity of anyone operating an account, including representatives. 100 It is
common for banks to require an additional signatory to apply to be a signatory of an
account, with the customer also signing the application. This also acts as a consent of the
customer for the addition of the signatory.
A bank can reduce the risk of abuse and protect itself from breaching its duties to its
customers by including terms and conditions in its contract with its customers to allow
questioning of mandates and/or allow a delay in carrying out apparently valid mandates
on suspicion of abuse. Banks can also educate their customers and staff in recognising
and dealing with suspected abuse.
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