Elder financial abuse in Australia is on the rise.
Elder financial abuse is where an older person’s money, property or assets are taken or misused by a trusted friend or family member. The most vulnerable are those with impaired capacity, or who are isolated, dependent or where English is a second language. Often by the time help is sought it can be too late, with the elderly person’s money or assets already gone.
A recent example was where Slater and Gordon recently acted for a blind elderly man, whose carer withdrew over $1.4 million in cash from his bank account without his knowledge. While our client signed cheques and withdrawal slips willingly he had been told by his carer that those documents were to pay his Council rates and other bills.
His carer used the cash to fund a gambling habit. While it is likely the carer will be charged with criminal offences, Slater and Gordon was asked to assist him to recoup his losses. We issued proceedings against his bank and settled out of court on a confidential basis. The proceeding gave rise to interesting legal questions.
Elder financial abuse and the banker/customer relationship
The banker/customer relationship is a strictly contractual relationship. Banks are not obliged to protect their customers from financial abuse, nor is there any responsibility on a bank to question how a customer chooses to use their money. The relationship is strictly one of contract – the customer deposits money, and if the bank is provided with an instruction or authority for the money to be paid out or withdrawn the bank must honour that mandate. In our client’s situation, the Bank’s defence was that it had been presented with signed cheques and withdrawal slips and had a mandate to payout the cash.
Banks are also subject to financial regulation. That regulation (among other things) imposes a duty on a bank to investigate potential instances of money laundering. In Australia, financial institutions are required to report suspicious cash transactions over $10,000 to AUSTRAC which is the anti-money laundering and counter-terrorism regulator.
In our client’s circumstances, his dealings on the account changed significantly during the period that his carer was withdrawing cash. Prior to that period, he drew modest amounts of cash to fund his living expenses. His carer was cashing thousands of dollars worth of cheques each day, and on many occasions over $10,000 worth of cash.
Although the case did not proceed to determination by the Courts, the circumstances raised significant questions as to how a bank ought deal with instances where it is known or suspected that an older person is being taken advantage of financially. The Australian Bankers’ Association has recently published a financial abuse protection package which is a welcome development. The package provides guidelines to banks explaining what financial abuse can look like, and how bank staff can respond.