Launched this week by the Australian Banking Association, National Seniors, the Council on the Ageing, the Older Persons Action Network and the Financial Services Union, the campaign aims to ensure that bank staff are “empowered” to properly detect and safely report elder financial abuse.
In February, Australia’s banks renewed their push for change and called on the federal, state and territory governments to have key policy changes decided by Christmas.
These changes are:
- standardised power of attorney orders across states and territories
- an online register of power of attorney orders
- a designated safe place for local bank staff and members of the public to report suspected abuse
Commenting on the new campaign, the CEO of the Australian Banking Association, Anna Bligh, urged for change.
“While elder abuse can take many forms, elder financial abuse is one of the most common forms and one that local bank branch staff witness regularly,” Ms Bligh said.
“Bank staff unfortunately all too often see people who are their customers being pressured to give access to their accounts, all too often see their accounts being drained by family members, by friends that they trust and care about.
“This is a really difficult, complex problem, but there are things that can be done about it.”
Ms Bligh continued: “The last meeting of Attorneys-General was an important step in taking action. However, every day we delay, the problem continues and grows in our community.”
Those wishing to take part in the campaign can do so through the ABA website or by writing directly to their state/territory federal Attorneys-General calling on them to take urgent action.
Royal commission highlights elder financial abuse
The banking royal commission hearings this year have shone a spotlight on how devastating the consequences can be when aspiring business owners are reliant on banks for funding, especially when elderly Australians are used as guarantors.
An example of this was highlighted in the third round of royal commission hearings: Commissioner Kenneth Hayne heard from blind pensioner Carolyn Flanagan, who sought legal advice after being informed by Westpac that her home would be sold to recoup losses incurred by the bank after her daughter and her partner (whose identities were suppressed) failed to repay a business loan that Ms Flanagan signed on to as a guarantor, with her home being used as security.
It was revealed that the lending manager filled out parts of Ms Flanagan’s guarantee, including an acknowledgement that she had been given legal advice, which the pensioner testified that she was not advised to do, despite rules stipulating that would-be guarantors be recommended to seek independent legal advice prior to signing an agreement.
The loan eventually fell into arrears and Westpac came knocking to repossess Ms Flanagan’s home, which was used as security.
Despite Ms Flanagan’s visibly frail state and inability to read, Westpac’s general manager of commercial banking, Alastair Welsh, said that, “technically”, there was no reason for the bank to dismiss a pensioner’s agreement to guarantee a loan, explaining that the duty of the bank’s lending managers is simply to ensure an asset is capable of covering the loan and that the guarantor is informed of the liabilities they are potentially exposed to.
The financial or physical health of the guarantor, or the position they would be in should the guarantee be called upon, do not come into consideration in the process, Mr Welsh added.
[Related: ABA updates Code of Banking Practice]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.