FAAA calls for consistent protocols on handling suspected financial abuse

In its submission to the Attorney-General’s Department’s consultation on the National Plan to End the Abuse and Mistreatment of Older People 2024–2034, the Financial Advice Association Australia (FAAA) called for more clarity in dealing with the “terrible form of misconduct”.

Noting that financial advice clients are generally more likely to be in either the years leading up to or just after retirement, the FAAA said it is “committed to doing everything that we can to play a role in addressing this issue”.

“The Financial Planners and Advisers Code of Ethics places a great deal of focus on acting with integrity in the best interests of clients and only with the client’s informed consent. In their role, financial advisers develop a great deal of understanding of their clients, their domestic circumstances and their family dynamics,” FAAA chief executive Sarah Abood said in the submission.

“The function that financial advisers play in the oversight of their client’s financial affairs is likely to enable them to see warning signs of financial abuse.

“However, feedback from FAAA members noted that the financial services industry lacks clear and consistent protocols and guidelines on handling suspected abuse cases, including how to approach the client, who to report the abuse to, and what legal protections are available for both the client and the financial adviser.”

According to the submission, privacy obligations and “inadequate whistleblower protections” can stand in the way of addressing financial abuse.

“Addressing these issues is critical to ensuring financial advisers can receive the appropriate training and support to detect the warning signs of the abuse of older people, and know how to respond to help their client in a safe and secure manner,” Abood said, adding that the FAAA was pleased that the National Plan recognised the “important role of financial advice”.

This is broadly in line with both the FAAA’s submission to the parliamentary joint committee (PJC) on corporations and financial services’ inquiry into financial abuse, as well as the PJC’s report in December.

The PJC recommended that “accounting bodies, financial advice and planning peak bodies, and victim-survivor advocate organisations co-design education resources for service providers to enable increased identification of financial abuse and timely reporting of suspected abuse to financial institutions and law enforcement bodies”.

According to the report, professionals such as financial advisers play a “crucial role” in identifying financial abuse, making sufficient training all the more important.

“The committee also identified that there are inadequate levels of ethical responsibility and professional training among financial planners, financial advisers, and accountants with respect to financial abuse,” it said.

“These professions play a crucial role as front-line service providers and often have a holistic and detailed knowledge of individuals’ financial situations beyond the knowledge of individual institutions, such as banks and insurance and superannuation providers.”

In its submission to the National Plan consultation, the FAAA said it was concerned over the PJC report’s “lack of recognition” of the barriers financial advisers face in helping clients that are potentially victims of financial abuse.

“Regardless, the FAAA is supportive of these recommendations and we are willing to play a leading role in the delivery of this training. We do, however, welcome whatever support and materials that we can get to assist us to do this,” Abood said.

The FAAA also “strongly support” tailored education and training for all relevant professionals on the abuse and mistreatment of older Australians, she said.

“We would also recommend that the Attorney General’s Department appoint liaison officers to work with bodies such as the FAAA to assist with the development of these programs and rolling them out to our members,” Abood added.

Last week, the Council of Australian Life Insurers (CALI) released a best practice guidance on family and domestic violence, setting a benchmark for “compassionate and effective engagement with victim-survivors”.

According to CALI, the guidance focuses on creating a framework and new processes that foster trust and avoid re-traumatisation.

This includes building flexibility into product design to address financial abuse and coercive control, simplifying policy changes for victim-survivors, and introducing additional security measures to enhance privacy and confidentiality.

CALI chief executive Christine Cupitt explained that contacting life insurance companies can often be difficult for people, however, this is further compounded for those who have suffered domestic or financial abuse.

“Financial and risk advisers are often the first point of contact for their clients when things go wrong,” Cupitt said.

“This best practice guidance will give financial and risk advisers confidence that, when a vulnerable client speaks with their life insurer, they will be cared for by a human being who is respectful, compassionate and empowered to assist them in their time of need.”