Mental Health Awareness Week, with its focus this year on the theme of loneliness, is a timely reminder of our duty to protect loved ones and elderly clients who might be vulnerable to financial abuse and undue influence.
According to Age UK, approximately 1.4mn older people in the UK consider themselves to be lonely and around half a million people aged over 65 experience some form of abuse or neglect. This might include controlling behaviour, coercion or isolating a person from their friends or loved ones. For many, the pandemic has exacerbated the problem.
Although loneliness and social isolation often go hand-in-hand, someone does not actually have to be socially isolated to be lonely. Sadly, older people who experience loneliness are more likely to develop Alzheimer’s disease and mental capacity issues, making them even more vulnerable.
There is a clear link between loneliness and social isolation within the elderly community and the fact this exposes them to financial abuse.
Section 42(3) of the Care Act 2014 defines abuse as including financial abuse, and for that purpose financial abuse includes:
Having money or other property stolen;
- Being defrauded;
- Being put under pressure in relation to money or other property; and
- Having money or other property misused.
- The recent increase in cases that we have seen generally relate to either a misuse of a power of attorney or undue influence, whether that be in relation to transactions carried out while the vulnerable person is alive or which leads to them making a new will.
In 2020-21, almost 680,000 lasting power of attorneys were registered. While the majority of those attorneys will act in their donor’s best interest, it is not always the case. We increasingly receive complaints that an attorney has made decisions in their own interests, rather than in the best interests of the donor, or that the attorney has obtained access to the donor’s assets and used them for their own benefit.
The difficulty often is that financial abuse may only come to light once that person has passed away. In those circumstances, it can be difficult to obtain the necessary evidence or information.
As such, it is incumbent on all of us as financial or legal advisers, trustees and/or executors to be vigilant to the signs of financial abuse. Indeed, the same can be said for our loved ones if we have concerns or suspicions that a friend, relative, carer or even professional adviser might be taking advantage of them.
Red flags might include:
- Unexplained withdrawal of funds from someone’s accounts.
- The failure to register an LPA after the person has ceased to have mental capacity to manage their finances.
- The person allocated to manage financial affairs is evasive or uncooperative.
- Sudden changes in deeds or title to property or late in life will changes.
- Someone moving into a person’s home and living rent free or, generally, a third party becoming ingratiated into someone’s life quickly and, potentially, without reason. Particularly if that leads to an increasing isolation from a usual routine or friendship and family groups.
- Last minute changes to a will that are potentially unexpected or unexplainable, and may be detrimental to friends or family that are at odds with previous wishes.
It is not always easy to notice the signs of financial abuse because it typically happens behind closed doors. The risk and difficulties are compounded when a person lacks capacity.
However it is our responsibility to act on any suspicions we may have, to try and engage with the potentially vulnerable person and attempt to talk to them about what is happening.
It may also be sensible to record any concerns contemporaneously in writing or even engineer the introduction of a trusted and independent contact to manage financial decisions, such as an accountant or wealth manager, to protect the individual in question.
Loneliness can have many adverse consequences. We need to do more to help ensure that financial abuse is not one of them.