The financial advice profession lacks consistent protocols for handling suspected financial abuse, and there are significant barriers to effective collaboration due to privacy laws and insufficient whistleblower protections, according to Sarah Abood, CEO of the Financial Advice Association Australia (FAAA).
In its submission to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into Financial Abuse, the FAAA put forward seven key recommendations to help reduce the impact of financial abuse:
- Take action to raise public awareness of financial abuse
- Create a central source of training, information and support for affected people, including the financial professionals who are the ‘frontline’ in identifying this abuse
- Establish a hotline for consumers and service providers
- Review the privacy and whistleblower protection laws to ensure relevant information can be safely shared, where financial abuse is suspected
- National harmonisation of currently state-based estate planning laws
- Establish a national register of Powers of Attorney
- Develop a standard identification, reporting and escalation framework.
Financial abuse affects a significant number of Australians, with the Australian Bureau of Statistics reporting that 1.6 million women and 745,000 men have experienced financial abuse. It is also recognised in both state and federal laws as a form of domestic violence, Ms Abood says.
“By implementing these recommendations, the FAAA believes we can create a safer financial environment and empower financial advisers with the tools and support they need to protect their clients from financial abuse.
“Financial advisers are uniquely positioned to detect signs of financial abuse due to their close relationships with clients and their families.
“Despite this, research conducted by the FAAA alongside members shows that there is no clear method of reporting or assisting clients who are subject to financial abuse.”
Ms Abood says financial abuse can manifest in various ways, such as unauthorised transactions, coerced changes to wills or financial documents, or exploitation of financial resources, and requires urgent attention and action.
“Financial abuse is often challenging to identify, making it a difficult issue to address. Some victims may not even realise they are being abused, especially if the abuse is subtle or if it occurs within families.
“We want to do all we can to stop this serious and insidious form of domestic and family violence, and addressing these challenges is crucial to protecting vulnerable Australians.
“Through clear guidance, training, and support, financial advisers can help protect clients and other family members from financial abuse and support them in regaining financial independence,” Ms Abood says.
