The Financial Advice Association Australia (FAAA) is calling for better handling of financial abuse, with financial advisers being “uniquely positioned” to recognise the signs.
In its submission to the Parliamentary Joint Committee on Corporations and Financial Services’ inquiry into financial abuse, the industry body urged clearer reporting on financial abuse.
Data from the Australian Bureau of Statistics reported that 1.6 million women and 745,000 men have experienced this form of abuse, which is also recognised in both state and federal laws as a form of domestic violence.
According to FAAA chief executive Sarah Abood, the advice profession lacks consistent protocols for handling suspected financial abuse. Privacy laws and insufficient whistleblower protections have also created significant barriers against effective collaboration in managing this issue, she added.
The FAAA’s submission put forward seven key recommendations to reduce the impact of financial abuse:
- Take action to raise public awareness of financial abuse.
- Create a central source of training, information and support for affected people, including the financial professionals who are the “frontline” in identifying this abuse.
- Establish a hotline for consumers and service providers.
- Review the privacy and whistleblower protection laws to ensure relevant information can be safely shared, where financial abuse is suspected.
- National harmonisation of currently state-based estate planning laws.
- Establish a national register of powers of attorney.
- Develop a standard identification, reporting and escalation framework.
“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 described.
“Financial advisers are uniquely positioned to detect signs of financial abuse due to their close relationships with clients and their families.”
However, research conducted by the FAAA highlights there is no clear method of reporting or assisting clients who are subject to financial abuse.
This type of abuse can present itself in several ways, Abood explained, including unauthorised transactions, coerced changes to wills or financial documents, and exploitation of financial resources – all of which demand urgent attention and action.
The CEO continued: “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. 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.”
Clearer training and support for advisers will enable them to further protect clients and family members from this societal issue and support them in regaining financial independence, she added.
The Finance Industry Council of Australia (FICA), which includes members such as the Financial Services Council and the Council of Australian Life Insurers, also recently affirmed its commitment to addressing financial abuse across the finance industry.
“We recognise that organisations across the finance industry have a key role to play in supporting people when they need it most, including if they are experiencing financial abuse,” it stated.
“Recognising the above and the importance of addressing financial abuse and family and domestic violence in Australia, FICA members are committed to working with the government and other stakeholders on an effective path forward.
“This includes but is not limited to: listening to victim survivors, acting in ways informed by their experiences, and looking at how we can work together to make sure financial products, services and technologies are not susceptible to being misused to perpetrate financial abuse or family and domestic violence.”
