Financial abuse – relevance to accountants

Content Summary

Understanding the context of financial abuse

The impact of financial abuse on older people can be profound. It can deeply affect individuals, families, the community and the economy.

The effect on the individual

Even if the sums involved are small, the effect can still be devastating for the older person who may have few assets and typically will not have the time or opportunity to recover their financial losses.

A financial loss may mean the older person can no longer afford the sort of care they need and had intended to provide for themselves. It may mean they can no longer do the things they enjoy, such as travel, going out with friends, pursuing hobbies or indulging their grandchildren. They may have to sell their home, leading to severe emotional stress and further social dislocation.

In addition to the financial loss, there may be loss of security, independence, self-esteem and confidence leading to ongoing fear, lack of trust and acute or chronic anxiety. The older person may become isolated, depressed and even more vulnerable to abuse. This may result in deteriorating health and possibly early death.

The late Mickey Rooney, the Oscar winning Hollywood actor, described the effect he suffered as a result of having been an alleged victim of financial elder abuse:

"When it happens, you feel scared, disappointed, yes and angry. And you can't believe that it's happening to you. You feel overwhelmed. When I asked for information, I was told that I couldn't have any information of my own. What the hell are you talkin' about. I was told it was none of my business, and when you're told that you're left (to feel) powerless"
— Mickey Rooney, testimony to the special U.S. Senate Committee on Elder Abuse, 2011

The effect on family, community and the economy

Financial abuse of a loved older person can result in bitterly divided families and general loss of trust, faith and confidence in all family members. The effect on the broader community may include negative impacts on caregivers, charitable and religious institutions and the courts.

The negative effect on the community as taxpayers and on the economy can be substantial. In many cases the abuse will result in greater dependence on government assistance and increase the potential costs of care to the community. The assistance required may include restitution advocacy, counselling, capacity assessments, asset investigations, emergency shelter, crisis intervention, legal assistance and assistance setting up ongoing support.

Australia’s ageing population

Australians are living longer and, as the Baby Boomer generation moves into the "older persons" age group, the proportion of the population in the over 65 age group is projected to grow. Most older Australians own their own homes and many have made some provision for their retirement. Compared with previous generations, they are relatively wealthy. With longevity will come greater numbers of people with dementia and therefore impaired capacity to make decisions for themselves.

A greater number of vulnerable people, with assets and with potential for impaired capacity, means that the issue of financial elder abuse will continue to grow in importance.

The importance of the accountant’s role