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

1. Introduction and Scope
This report examines areas of potential legal liability banks may incur in reporting
suspected financial abuse of elderly customers by third parties.
The report focuses on the relationship between a bank and its customers in relation to
ordinary deposit accounts and everyday transactions. It does not consider transactions
such as loans or financial advice, insurance or other banking products, and it should
be noted that the findings would be substantially different in relation to such banking
products.
This report does not examine schemes that have been established in some international
jurisdictions for reporting and investigating instances of financial abuse and how similar
measures might operate in Australia. Rather, it looks at the capacity of banks and other
financial institutions to respond to financial abuse identified in the banking transactions
of older customers and the legal constraints on banks and financial institutions if the
response necessarily involves third parties or requires third party intervention.
The breadth of what may constitute financial abuse makes defining it a complex task.
Financial abuse has been variously defined as:
(a) ‘any act or omission that results in harm to an older person which occurs
in a relationship where there is an implication of trust’; 4
(b) ‘the illegal or improper exploitation or use of funds or resources
of the older person’; 5
(c) ‘illegal or improper exploitation by using funds, property, or other assets of a
vulnerable adult for personal gain irrespective of detriment to the vulnerable adult’; 6
(d) ‘when a person illegally or improperly uses the resources of an incapacitated
or dependent adult for the profit or advantage of someone other than the adult’. 7
The Banking and Financial Services Ombudsmen (‘BFSO’) considers that the necessary
ingredients of financial abuse of elderly persons are as follows:
(e) ‘the direct or indirect use of the funds, assets, accounts or facilities;
(f) by a third party;
(g) of an older person;
(h) who is vulnerable because of incapacity, or dependence on or trust in a third party
(which, together with detriment would make the conduct improper); or
(i) which is illegal conduct (e.g. forgery or fraud); and
(j) which is to the detriment on potential detriment of the older person
and to the gain of another person.’’ 8
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