The financial advice sector needs standard procedures to address suspected financial abuse and is prevented from working collaboratively because of privacy laws and poor whistleblower protections, the Financial Advice Association Australia (FAAA) has told the government.
FAAA chief executive Sarah Abood said the close relationship financial advisers had with clients and their families meant they were in a prime position to detect signs of abuse, but research conducted by the association indicated there was no clear method of reporting abuse or assisting clients subjected to it.
“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,” Abood said.
“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.”
She said official statistics showed 1.6 million women and 745,000 men had experienced financial abuse, which can take place through things such as unauthorised transactions, coerced changes to wills or financial documents, and exploitation of financial resources.
The FAAA’s comments follow its submission to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into financial abuse, in which it made seven recommendations to reduce the impact of financial abuse.
The adviser body called for action to raise public awareness of financial abuse and the development of a standard identification, reporting and escalation framework.
In recommendations more specifically related to advice practitioners, it called for the creation of a central source of training, information and support for affected people, including the professionals who often identify the abuse, and a new hotline for consumers and service providers to report it.
In terms of reporting, it said there should be a review of the privacy and whistleblower protection laws to ensure relevant information can be safely shared where financial abuse is suspected and state-based estate planning laws should be harmonised at a national level, alongside the creation of a national register of powers of attorney.
“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,” Abood said.
