You web browser may not be properly supported. To use this site and all its features we recommend using the latest versions of Chrome, Safari or Firefox


As our population ages, our vulnerable elderly people are increasingly falling victim to elder abuse perpetrated by adult children, family members, friends and carers. But older Australians are also increasingly preyed upon by fraudsters.

The Financial Ombudsman Service (FOS) has recently published two determinations which consider whether the older person’s bank is liable for “allowing” them to transfer funds.

In the first case (Case number 431342, 2 December 2016), the Applicant transferred $123,019 from his bank account to a fraudster who kept the funds. The Applicant claimed the bank should compensate him for his loss. FOS found, however, that the bank did not cause or contribute to his loss – that the funds transfer was authorized. The bank drew the Applicant’s attention to the fact that the transaction may amount to a scam but the Applicant decided to proceed in any event. In that context, the bank was required to act on the valid instruction from its customer.

In the second case (Case number 472675, 2 August 2017), the Applicant requested in branch that his bank transfer funds overseas. The Applicant was a regular visitor to that branch, and was known to the bank staff. The proposed transfers were significantly out of the ordinary for the Applicant. The Applicant also had appointed a Power of Attorney. The Applicant made two transfers of over $100,000 each. FOS determined that the bank should compensate the Applicant for his losses for the following reasons:

  1. The bank should have contacted his appointed attorney to discuss the proposed transactions. If they had done so, it is likely the transfers would not have occurred
  2. While the banker / customer relationship is one of contract only, if something additional is known to the banker about the transaction which would cause a reasonable banker to ask questions about the instructions, they should do so
  3. FOS referred to the Australian Banker’s Association Industry Guideline called “Protecting vulnerable customers from potential financial abuse” which sets out best industry practice and includes, among other things, asking questions about the proposed transaction and elevating the situation to a branch manager who can help assess whether the transaction should be processed or whether legal / compliance / fraud department advice should be sought

While these two determinations are of great interest to the banking sector, it is also a good reminder that in some circumstances, an older person being the victim of a scam or fraud can recover losses from the financial institution.

Our elder abuse lawyers provide free initial telephone advice to older people or their representatives on losses suffered as a result of elder financial abuse or scams.

If you would like to enquire about an elder abuse claim call us on 1800 555 777 .

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

Thank you for your feedback.

Related blog posts

Consumer and the Law
Banking Royal Commission legislation introduced

On 28 November 2019, the Government introduced legislation in line with the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The legislation is designed to provide further protections for consumers and small businesses and is set to be passed in early 2020. Below is an overview of the proposed legislation. Click here for a recap of the Banking Royal Commission from our Head of Class Actions, Ben Hardwick. Under the proposed legislation, mortgage brokers will be required to act in the best interests of consumers when providing credit assistance. That means where there is a conflict of interest between the consumer’s...

Gavel and weights two people talking resized
Financial Negligence
The Australian Financial Complaints Authority’s powers are being expanded for 12 months: Do you …

The Australian Financial Complaints Authority (AFCA) is responsible for providing consumers and small businesses with free and independent dispute resolution for financial complaints. AFCA considers complaints in relation to: These complaints were previously handled by the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. The usual time limit for making a complaint to AFCA is 6 years from the date you became aware of the financial loss.[1] However, when a complaint has already been through the financial firm’s internal dispute resolution process, the time limit is reduced to 2 years from the date you receive response from the...

Finance Planning People Documents Resized
Financial Negligence
Switching Super Funds?

When a financial adviser recommends switching superannuation funds they are required to give you specific information and if they fail to do so this can constitute professional negligence and entitle you to compensation if the switch results in you suffering financial loss. Specifically, the advisor must tell you about: Each of these required disclosures must be provided in a written document called a Statement of Advice which sets out the adviser’s recommendations as well as the particular information required when an adviser recommends a switch. A financial adviser should take reasonable steps to find out the necessary information, such as asking you for details of your current...

We're here to help

Start your online claim check now. Or, if you have a question, get in touch with our team.