In the wake of rising cases of financial abuse, particularly among older adults, financial planners are uniquely positioned to act as the first line of defence. The Office for National Statistics reported that around 1.5 million older adults in England experienced some form of financial abuse in 2020, highlighting a significant and growing problem. As financial professionals, there is a critical role to play in both detecting signs of financial abuse and taking action to protect clients and their assets.
Understanding Financial Abuse
Financial abuse involves the illegal or unauthorised use of someone’s property, money, or other valuables. The Care Act 2014 broadly categorises financial abuse to include theft, fraud, exerting pressure regarding money or property, and the misuse or misappropriation of assets. Examples range from internet scamming and the improper use of funds to the exploitation of powers of attorney. Often intertwined with issues of capacity and undue influence, financial abuse can significantly impact the well-being and financial security of the vulnerable.
The Role of Financial Planners
Financial planners have a pivotal role in identifying financial abuse. Due to the close relationship with their clients and an in-depth understanding of their financial activities, planners are often in a prime position to notice red flags. These may include unusual withdrawals, sudden reluctance to discuss financial matters, inexplicable gifts or changes to a will, and signs of undue influence or coercion.
Actions to Challenge Financial Abuse
- Spotting the Signs: Vigilance for changes in clients’ behaviour or financial patterns is crucial. Planners should be alert to any action that deviates significantly from a client’s normal financial behaviour or decisions that do not align with their known wishes or best interests.
- Capacity Assessments: Understanding and assessing a client’s capacity to make decisions is essential. If there’s doubt about a client’s ability to manage their affairs, professional capacity assessments may be necessary.
- Challenging and Recovering Misappropriated Funds: In cases where assets have been misappropriated, steps include seeking assistance from legal authorities such as the Office of the Public Guardian or the Court of Protection. Legal actions might involve undoing the effects of undue influence, challenging the validity of wills, or recovering assets through civil proceedings.
- Preventative Measures: Planners can guide clients in taking steps to protect themselves, such as establishing Lasting Powers of Attorney (LPA) with trusted individuals. Regular reviews of wills and financial plans, keeping detailed records of meetings and decisions, and seeking legal advice when concerns arise are all prudent practices.
- Education and Awareness: Raising awareness among clients about the risks and signs of financial abuse is a preventive measure. Planners can play a significant role in educating clients and their families on how to protect their financial interests.
Conclusion
Financial abuse poses a significant threat to the security and dignity of older adults and other vulnerable individuals. Financial planners, with their unique position and insight into clients’ financial lives, have a critical role in detecting, preventing, and addressing financial abuse. By remaining vigilant for signs of abuse, taking action when abuse is suspected, and educating clients on protective measures, planners can significantly contribute to safeguarding their clients’ financial well-being.
Academy of Life Planning 