FOS disputes arising from elder abuse incidents
SMSF firms are being urged to act on any unusual behaviour from elderly clients with one firm forced to refund $30,000 for its failure to prevent an elder abuse incident.
Partners Legal special counsel Caroline Harley said where the practitioner has an uneasy feeling about a situation, and the client has someone new or different with them, it’s vital the practitioner acts on this and further questions the client.
In one particular dispute taken to the Financial Ombudsman Service (FOS), she said, a client attended an appointment with a new friend who asked the financial services provider to withdraw $30,000 from the client's super fund.
A condition of release had already been met so there no issues with withdrawing the amount from that perspective and the transaction was completed a few days later, she explained.
Later, the financial service provider found out that the client had lost their decision making ability. The GP had actually put it in writing but nobody informed the firm of that, and the friend that attended the meeting pocketed the $30,000, she said.
The firm then discovered there was an enduring power of attorney that had been appointed and that EPOA complained to FOS, said Ms Harley.
“They [said] that [the professional] should have questioned that behaviour, because it was inconsistent with previous behaviour. They say that [the firm] should have prevented the transaction.”
“Here the financial services provider was found not to comply with good industry practice. The financial services provider had to refund the money because they should have discussed the transaction with the client in private away from the new friend and they should have taken steps to identify and protect the client from financial abuse.”
This is a daunting requirement for financial services providers she said because it’s difficult to pin down exactly what the “take steps to identify and protect a client from financial abuse” actually entails, she cautioned.
“This is where if you have an uneasy feeling, you've got to act on it. You've got to have processes, procedures and more importantly protection for yourself as an individual professional and your overall business,” she said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.