Latest Products

The Role of the Power of Attorney

Thursday 21 June 2018



Financial Services 

 Powers of Attorney (POA) can help empower banks to tackle elder financial abuse.
The Australian Banking Association (ABA) has called on the public to help tackle elder abuse, announcing a collaborative effort with the National Seniors and the Council on Ageing, the Older Person’s Action Network, and the Finance Sector Union (FSU).

This announcement comes just after the United Nations World Elder Abuse Awareness Day.

According to an official statement from the ABA, this collaborative campaign invites Australians to write to their state and territory attorneys to “…empower bank staff to properly detect and safely report Elder Financial Abuse.”

ABA CEO, Anna Bligh, said that elder financial abuse is one of the most common forms of elder abuse.

“We need a standardised POA order, with an online register and a designated safe place to report suspected abuse to help address this growing problem in our community,” Bligh said.

This comes after ABA’s February call for:

  • Standardised Power of Attorney orders across state and territories;
  • An online register of Power of Attorney Orders; and
  • A designated safe place for local bank staff and members of the public to report suspected abuse.


The role of POA and what else can be done
GRC Professional Magazine reached out to Stephen Newton, Senior Compliance Manager at Petra Investment Capital and co-author of the ALRC’s Elder Financial Abuse response paper, and asked him about ABA’s drive to empower banks through the power of attorney.

“I like the idea of a national registry of enduring powers of attorney, and a legal framework that allows courts (or ombudsman-type people) to expeditiously review cases of possible abuse brought to their attention by financial institutions with the power to stop such transactions (at least temporarily) until properly reviewed,” Newton said. “The latter would only work if properly resourced. But an Enduring POA registry could be a cheap, simple, quick win.”

The challenge lies in the increasing complexity of financial transactions and the increasing reliance of elderly persons on other people to make such transactions on their behalf.

After a certain age, many people become dependent upon their relatives, and sometimes, these relatives are invested with powers of attorney.
Newton highlighted three issues:

  1. The family member does not necessarily understand how the old person wants to deal with their financial contingencies;
  2. There is the danger of dependents of seeing themselves as possible beneficiaries and this can be seen as conflict of interest; and
  3. The lack of financial expertise of the relative/s.
“People are unable,” Newton said. “They are not ill; they are demented. They just get to a stage of complexity where they can’t handle stress and pressure.”
 

Elements of POA
Powers of attorney can be abused.

“The thing about POA is that they could or should have been done years ago, or they are enacted without [the elderly person’s] proper understanding of all the powers that they are giving over.”

Newton suggested that there is a need here for some kind of equitable remedy to override contractual rights and deeds. Currently, what does exist in this context is quite laborious.

“It needs to be relatively easy,” he said. “And it needs to be well-resourced so the POA can be overridden or at least referred to the court or AAT for arbitration, or something like that to modify or delete it.”

Newton suggested that maybe when there is suspicion, it could be reported in a manner similar to a suspicion transaction—that someone can report it to some authority that can make enquiries and take action.

Newton also suggested that, given the lack of understanding of POA, there does probably need to be a requirement where the parties involved receive advice before the POA is enacted.

“Perhaps legal advice can provide a certificate as ‘proof of legal advice provided’ before the POA has been made,” Newton said. “This structure is already in place for other documents.”
 

New call for collaboration
In June 2017, the ALRC released a report entitled Elder Abuse—A National Response, which indicated that financial institutions are placed uniquely to help tackle elder financial abuse. The report went on to recommend that the Code of Banking Practice should be amended to allow banks to take ‘reasonable steps.’

The ABA’s call comes at an interesting time, since the FSU—one of the ABA’s collaborators in the push to tackle elder financial abuse—has also been reported in the AFR as calling for amendments to the Australian Financial Services Codes of Conduct, in light of the revelations of misconduct highlighted by the Royal Commission.

Those wishing to join the campaign can click
here.