Combatting financial abuse of older and vulnerable clients

On June 15, the United Nation's World Elder Abuse Awareness Day took place, reminding us that abuse particularly of older and vulnerable people is a worldwide problem and increases every year. Financial abuse encompasses many well-known guises, including theft, forgery, housing transfers and unauthorised bank transactions. However, there are also more obscure types of abuse including an attorney paying off their own mortgages and loans with a donor's money, attorneys making gifts to themselves or members of their own families and sham or predatory marriages.

Several pieces of legislation have sought to introduce a statutory framework here, including The Care Act 2014 whose guidance lists potential indicators of financial abuse including: change in living conditions; lack of heating, clothing or food; inability to pay bills/unexplained shortage of money;  unexplained withdrawals from an account; unexplained loss/misplacement of financial documents; the recent addition of authorised signers on a client or donor’s signature card; or sudden or unexpected changes in a will or other financial documents.

The Domestic Abuse Act 2021 then widened the definition of financial abuse to include economic abuse. This is defined as behaviour that has a substantial adverse effect on the victim’s ability to acquire, use or maintain money or other property or obtain goods or services. Examples of this include controlling the family income; not allowing a victim to earn or spend any money unless ‘permitted’; running up bills and debts such as credit or store cards in a victim’s name, including without them knowing; refusing to contribute to household income or costs;; and coercing the victim into signing over property or assets.

New safeguards

Various surveys and reports over the last 10 years have made important recommendations to combat this abuse. The 2015 Age UK’s report ‘Financial Abuse Evidence Review’ recommended various safeguards for donors of powers of attorney including the submission of annual accounts, random auditing of accounts and appointing more than one person to be an attorney. There was also a recommendation for ongoing supervision by the OPG. Again in July 2019, the think tank Demos called for more oversight of powers of attorney by the Office of the Public Guardian and tighter bank supervision of accounts.

At long last we may now be seeing some positive steps as regards powers of attorney and safeguards. The Power of Attorney Bill 2022, which is finally reaching a conclusion in parliament this month, provides for some strengthened safeguards for the vulnerable. The three key features are:

• Applications for registration: the MCA is to be amended to ensure that in the future only the donor may apply for registration of the LPA. At the moment it can be either the donor or the attorneys who apply for registration. This should increase the protection of a donor so that they must now sign their own application for registration
• Notifications: In future the OPG will notify all parties not just the named persons but also the donor and attorneys that this is happening. This will increase safeguards for the donor that the people they would like to be informed of registration are actually given that notice.
• Identification of parties: the OPG are to be given powers to verify the identity of all parties to the LPA. Without valid verification the LPA will not be registered. It remains to be seen how the OPG will carry out this ID checking. This may well include not only the donor and attorneys (including replacement attorneys) but also the certificate provider.

Rising levels of abuse

Instances of financial abuse appear to be on the rise in recent years. This could be due to the cost-of-living crisis, rising rents and mortgages and increased opportunities for abuse during the Covid-19 crisis. It is reported that scam helplines received an unprecedented number of calls in 2021 leading one report to call it a fraud epidemic.

Worryingly, the charity Hourglass reports that 33.9 per cent of UK wide respondents did not see family members trying to change the wills of older people as abuse. Similar numbers thought the same about taking money from older relatives’ bank accounts without asking. All of the following types of financial abuse cases mentioned here will involve some kind of 'grooming' of the victim to persuade them to give up rights or assets against their will. Much of such grooming will take place when the victim is at their most vulnerable – whether through reduced cognitive powers, bereavement or deteriorating health.

As professionals we can all take some simple steps to help protect our clients from abusers. What we see is that victims, especially those recently bereaved, crave the attention of others and can be blind to the abuse they are suffering. Quite often it takes repeated and systematic abuse for a victim to call for help. The victim will feel embarrassed that they have been taken advantage of.

Spotting abuse

What kind of cases should we be looking out for? Here are some examples of the types of cases we have seen in practice or which have come before the courts in recent years:

• Wills: Putting undue pressure on an elderly parent to change their will in favour of the abuser -see for example Re Edwards 2007 EWHC [1119] (Ch) where the will was set aside on the grounds of undue influence and access to the testatrix was controlled by her son.
• Banking: giving an unknown third-party access to the account or to become a joint account holder.
• Property transactions: See cases where a gift was made where no authority to transfer property into joint names by attorney: Chandler v Lombardi [2022] EWHC 22 (Ch) or also see Re OL [2015] EWCOP 41 involved LPA attorneys who paid off their own mortgage and transferred the property into their own joint names.
• Powers of attorney: arranging for powers of attorney to be signed where the donor does not have capacity to sign the document.
• Financial transactions under a power of attorney: See for example a case involving unexplained expenditure, loans, and unpaid care fees: Re AB [2014] EWCOP 12.
• Predatory marriages: The recent case of WU & BU & Others [2021] EWCOP 54 highlighted the dangers that such adults face. The court here held that an elderly widow lacked capacity on various grounds including as regards to decisions about contact and needed protection under the Forced Marriage (Civil Protection) Act 2007.

How can we safeguard our clients from financial abuse. The following should be standard advice to the clients:

They should consider:

• a well drafted lasting power of attorney – the primary way that individuals can protect themselves from financial abuse is to choose attorneys who are trustworthy but coupled with real safeguards embedded in the LPA.
• encourage clients to report suspected cases to both the local authority and the police.
• report a concern about an attorney or deputy to the OPG – use form OPG130.
• property alerts: always consider registering an alert at HM Land Registry. This ensures that any dealings with a registered title are notified to a concerned person in advance of the dealing or transaction being completed.
• family discussions: having open conversations within the family so that everyone knows what the plan is to help the older family member in the future
• ensure that the older person knows to be suspicious of unusual behaviour such as new people wanting to befriend them, people trying to limit their contact with family and friends, or taking an increased interest in their finances. Families have an important role to play here to keep up regular visits.
• Cifas currently offers a programme called ‘Protecting the Vulnerable’ which allows attorneys and deputies to join a protective register. It ensures that any application for a new financial product made in the name of the vulnerable person will usually be automatically rejected.
• complaints procedures: if abuse occurs consider making a complaint to a bank, Financial Services Ombudsman, Trading Standards or the Care Quality Commission.

These are some of the steps we all take to protect our clients but financial abuse is an increasing trend and we as legal professionals are on the frontline to prevent such abuse from taking hold.

Ann Stanyer is a partner at Wedlake Bell LLP. She is also the author of Financial Abuse of Older Clients: Law Practice and Procedure (2^nd Edition published by Bloomsbury Professional)