The Financial Advice Association Australia (FAAA) endorsed the Australian Taxation Office’s invitation to provide feedback on the Vulnerability Framework, highlighting the need for greater guidelines for advisers to follow in cases of financial abuse.
Responding to the ATO’s consultation paper on its vulnerability framework, the FAAA acknowledged the important role of financial advisers in addressing financial abuse; however, it noted the need for clarity around how the profession can handle the issues when they arise.
Though expressing concern for all financially vulnerable individuals, the FAAA drew particular attention to those facing financial abuse.
According to the Australian Bureau of Statistics, 16 per cent of women and 7.8 per cent of men will experience financial abuse in their lifetimes.
“Financial advisers are uniquely positioned to detect signs of financial abuse,” FAAA general manager of policy, advocacy and standards Phil Anderson said.
“[This is due to] their close relationships with clients and their families,” he added, highlighting the need to end what the FAAA called a “serious and insidious form of domestic and family violence”.
According to the FAAA’s submission, members had noted in response to the earlier parliamentary joint committee inquiry into financial abuse that the financial services industry lacks guidelines and protocols on handling cases where abuse is identified.
This includes how to approach clients, who to report abuse to and what legal protections are available for both clients and advisers.
“Despite the lack of guidelines on how to respond, the FAAA suggests that all participants in the financial system should be alert to victims of financial abuse,” Anderson said.
With this statement, the FAAA also included its responses to the feedback questions, largely endorsing the initiative, stating that the “guiding principles are excellent: well-framed, concise and reassuring to the reader”.
“The FAAA applauds this initiative by the ATO and is highly supportive,” it said.
However, the response also included feedback on what the FAAA believes can be improved.
One example is the FAAA’s belief that “the draft framework could benefit from one or two practical examples of how a client’s situation might make them vulnerable, and how the ATO would act in the specific situation”, particularly around “age-related or language-related limitations”.
It also highlighted that the draft would benefit from greater detail on what a financial professional, including an adviser, is able to do to help a vulnerable person. The FAAA suggested adding ideas for tailored support, such as “offering flexible options where possible, explaining information clearly or referring someone to another service for help”.
“Financial abuse is often hidden and challenging to identify, making it a difficult issue to address,” Anderson said.
“Many victims may not even realise they are being abused, especially if the abuse is subtle or if it occurs within familial relationships where trust is implicitly granted.”
It is because of this that financial advisers are in a unique position to be able to identify where this kind of abuse may be taking place, typically being intimately familiar with a client’s finances, but lacking the guidelines on how to act if they sense something is wrong, with many in the FAAA wanting this to change.
“We are keen [as a profession] to do all we can to stop this serious and insidious form of domestic and family violence,” the submission said.
The FAAA has already called for “consistent” protocols in the past, stating there was a “lack of recognition” towards the barriers faced by financial advisers in terms of being able to assist clients in these matters. The FAAA also made a submission to the joint parliamentary committee on corporations and financial services’ inquiry into financial abuse.
Just jam more business jeopardy onto advisers. No worries.
What else would you like Financial Advisers to do for you whilst you happily impose a fee to pay for all the unrelated crooks that fraud the public through your CSLR? We are not your go to for everything you cannot manage – how about you get your industry fund buddies who are “qualified financial advisers” to detect these crimes for you. What a joke the government is.
I love how a lot of these super trustees wouldn’t have a clue as to who their clients are but expect advisers to do all the heavy lifting for them anytime a change is required.
Sooner or later, I’m going to send an invoice to these Trustees for the hours of time wasting doing their job for them.
Australia genuinely is an absolute joke when it comes to this stuff.
I’m greatly concerned this is yet another area where advisers will be made to pay for the misdeeds of others.
As a practice we charge extra when dealing with a PoA – we have to, because of the extra responsibilities foisted upon us by product providers and the government.
If the ATO is issuing guidelines for us, it further muddies the waters as to adviser responsibilities. This will increase costs. Currently we have professional judgement and clients stated wishes. However guidelines are more like a prescriptive set of expected actions which removes professional judgement in unique circumstances.
We have stats on financial abuse, how many of the abused were clients of FP firms?
A cynic might say the ATO is trying to avoid clients who are terminally ill or pushing over the 3 million mark, from withdrawing their super and giving it to their kids.
Financial abuse is a crime. Police arrest suspects, courts determine whether a crime has been committed.
Financial advisers do not fit into this equation, unless there is some government department that suspected criminals can be reported to. The only available option is to report this to the police. Good luck with that.
You cant put obligations on advisers to identify the victims or the perpetrators, and you certainly cant expect advisers to take action against suspects and criminals. That is what the police and the courts do.
What are FAAA hoping to achieve here? it is just something else that will end up at AFCA, and getting advisers banned by FSCP, when it is completely out of their control. The government needs to implement measures to address CRIME! this is not an obligation that can sit with advisers.
Can’t wait to see an AFCA case where an adviser gets a complaint from the kids of a deceased estate because the POA has misappropriated funds. (Even $5,000).
As advisers, we are accountable for everything. Including the weather it seems.