Ann Stanyer highlights ‘red flags’ signalling potential financial abuse that all advisors should watch out for, wherever they are based.
Financial abuse is on the rise. The England and Wales Office of the Public Guardian’s annual report for 2017/18 showed that out of 5,245 safeguarding referrals some 1,886 cases were accepted for investigation: a 48.9 per cent increase over the previous year. There were a further 3,156 cases referred to other agencies, including the police and local authorities. In the UK, there is a serious absence of research and a resulting paucity of statistics or reports in this area. We know that not all cases of financial abuse are reported, and that even more cases are suffered in silence by the victims. However, private client practitioners can often witness instances of financial abuse first-hand without recognising it for what it is, and it would help us all, not least the victims, to be better able to spot the following warning signs, or ‘red flags’, of potential financial abuse.
POTENTIAL VICTIMS
Experience shows that some adults are more vulnerable to influence and manipulation than others. Mild cognitive impairment can make an elderly person increasingly less able to manage their affairs, while someone who has had a debilitating illness or stroke will often be made physically less able, which can also lead to social isolation. We all know of clients who, being recently bereaved, will feel particularly exposed to financial demands, for example from economically stretched members of the family. It is also still common to see elderly widows, in particular, who do not have financial management skills and as such are open to manipulation or abuse. Finally, we will know of clients who are trusting of those who do not have their best interests at heart, whether family members or overbearing carers. Understanding a client’s personal situation will help to reveal signs of their becoming a potential victim.
POTENTIAL PERPETRATORS
Potential perpetrators of financial abuse will often have moved into the victim’s home uninvited or already be living there. They may be the only adult child in the family with time available, or may have imposed themselves as the parent’s carer. It might also be apparent that they have financial, relationship, alcohol or gambling problems. A particularly worrying sign that should instantly raise a red flag is any tendency towards secretiveness, or of being critical of others trying to help, such as acting with hostility to those who would willingly share the caring role. The presence of individuals unknown to you should also raise red flags, especially if they are taking a keen interest in your client’s affairs. Be prepared to challenge the client and others about discontinued relationships, sudden or unexplained changes required to a will and an increased dependence on a third party. Ask the client for permission to communicate with others in the family if you have real concerns.
FINANCIAL FLAGS
A client’s finances might also serve as a flag of potential abuse. Find out whether the client shares their financial details with anyone else, and advise them to keep any financial documents in their home out of plain sight. Ask yourself the following questions: How does your client manage their finances? Will they be prepared to give a power of attorney to a trusted family member, friend or professional? Are there any indicators that matters are out of hand? Are they reliant on someone to withdraw money for them and, if so, do their bank statements show large or unexplained withdrawals? Will they allow you to go to the bank with them to put in place additional protective measures?
HOME VISITS
During a client visit, a practitioner’s primary focus will be on paperwork and checking that the client can recall all the matters required to give clear instructions. However, it is also beneficial to take note of more personal details, such as:
- a lack of care in appearance;
- untreated medical conditions;
- evidence of being scammed or large quantities of subscription services; or
- an unkempt home environment.
It is also helpful to take note of any changes since your last meeting. Explain to the client how important it is to maintain family communication, as this will both prevent unfounded suspicions building up and help to discourage any one individual from becoming a ‘gatekeeper’ to the client.
CONCLUSION
Private client solicitors are awarded a great insight into their clients’ lives, and these indicators will enable you to view your elderly or vulnerable clients through a different lens, make you more alert and prompt you to ask more searching questions. In turn, you will be empowered to put in place real safeguards to protect your client for the future.
This article was originally published by the STEP Journal, on 4 April 2019. (£)