ALRC Elder Abuse report and financial institutions

The Australian Law Reform Commission (ALRC) has published its report Elder Abuse – A National Legal Response.

The report calls on the Council of Australian Governments (COAG) to harmonise inconsistent rules and regulations across the states and territories by establishing a national policy framework for older persons including the introduction of a national register of enduring powers of attorney and separate proposals aimed at banks and other financial institutions.

Elder abuse is defined as ‘a single, or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person’. It can take various forms, such as physical abuse, psychological or emotional abuse, financial abuse, sexual abuse, and neglect.

The report’s 43 recommendations include:

  • Consistent laws across states and territories;
  • A new serious incident response scheme in aged care legislation;
  • A national register of power of attorney documents;
  • Training for bank tellers to identify financial abuse.

Enduring appointments

Currently there is no national register to establish whether a power of attorney is valid or whether it has been revoked or superseded by a later document.

The ALRC recommends reforms to laws relating to enduring documents, including: adopting nationally consistent safeguards; giving tribunals jurisdiction to award compensation when duties are breached; and establishing a national online register.

Guidelines for financial institutions

The ALRC says there are separate proposals aimed at banks and other financial institutions as they are in a good position to detect and prevent the financial abuse of their older and at-risk customers. The ALRC recommends that the Code of Banking Practice be amended to require banks to take ‘reasonable steps’ to identify and prevent the financial abuse of vulnerable customers.

The Report recommends banks should also speak with vulnerable customers directly, or otherwise check arrangements, when a form purports to authorise another person to operate someone’s
bank account. They should also warn customers, train staff, and take other steps to ensure people are not being financially abused when they guarantee a loan.

Guardianship and administration
The ALRC recommends that private guardians and private financial administrators be required to sign an undertaking about their obligations and responsibilities.

Binding death benefit nominations

To resolve uncertainty whether an enduring attorney may sign a binding death benefit nominations on behalf of a superannuation fund member the ALRC recommends a review of the provisions.

The ALRC’s recommendations in relation to SMSFs are designed to:

  • better facilitate the process for appointing a person’s enduring attorney as trustee/director of their SMSF in the event of a legal disability;
  • improve planning for a potential legal disability as part of the operating standards of an SMSF; and
  • ensure the Australian Taxation Office is notified when an enduring attorney has taken over as trustee/director of the SMSF following the principal suffering a legal disability.

Family agreements
Some ‘family agreements’ involve an older person transferring the title to their home, or the proceeds from the sale of the home or other assets, to an adult child in exchange for ongoing care, support and housing. These ‘assets for care’ arrangements are typically made without legal advice and are often not put in writing. There can be serious consequences for the older person if the promise of ongoing care is not fulfilled, or the relationship breaks down. The older person may even be left without a place to live.

The ALRC recommends that tribunals be given jurisdiction over disputes within families with respect to these arrangements. The ALRC also recommends that the Social Security Act 1991 (Cth) be amended to require that assets for care agreements (which give what is described as a ‘granny flat interest’) be expressed in writing, for the purpose of calculating the Age Pension.

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