​​Reporting and recognising financial abuse ‘squarely’ within adviser responsibilities

With unique insights into their client’s lives and ability to identify financial abuse, recognising and reporting financial abuse is core to an adviser’s duty to their client, according to one industry leader.

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, with increased awareness around the issue identifying it as an often unseen and overlooked form of domestic abuse.

Dealing primarily in the financial realm, advisers are better equipped than most professionals to help identify this form of abuse, according to Amanda Casser, CEO and director of Wealth Planning Partners.

“Financial advisers have deep and trusted relationships with clients that go far beyond the numbers,” Cassar told ifa.

“We’re privy to family dynamics, behaviour, and changes in circumstances that others might never see. This gives us a unique opportunity, and possibly a responsibility to recognise when something isn’t quite right.”

However, just where that responsibility extends is a controversial topic among advisers, with many arguing it complicates the adviser-client relationship and places an unnecessary burden on their shoulders.

In light of this, Cassar argues that monitoring and reporting financial abuse sits “squarely” within adviser responsibilities.

“The FASEA Code of Ethics, particularly Standards 2 and 5, requires us to act in our clients’ best interests and to ensure the advice we give supports informed, free, and independent decision-making,” she asserted.

“If a client’s autonomy is being undermined through coercion or control, it’s extremely difficult to meet those standards.”

Cassar did, however, highlight that advisers should not be expected to solve cases of abuse.

“Advisers aren’t expected to investigate or resolve abuse, we can still play a vital role by observing, recording, and referring concerns appropriately,” she said.

“Identifying when something isn’t right is part of safeguarding our clients’ wellbeing and that’s at the very heart of what ‘acting in their best interests’ truly means.”

As it stands, advisers are not classified as mandated reporters of financial abuse clients, such as in health and aged care, despite the unique insights they have.

In response to calls for growing awareness, the Financial Adviser’s Association Australia (FAAA) has adopted the ATO’s guidelines on identifying and reporting financial abuse.

“Financial abuse is often hidden and challenging to identify, making it a difficult issue to address,” Phil Anderson, general manager of policy, advocacy and standards at the FAAA said earlier this year.

“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.”

Welcoming this change, Cassar emphasised that more still needs to be done.

“I’d love to see mandatory training on identifying and responding to financial abuse across the advice profession, supported by clear reporting frameworks and collaboration with regulators, community organisations, and law enforcement, where necessary,” she said.

“Ultimately, tackling financial abuse requires a collective effort, where every professional who touches money recognises their role in protecting vulnerable people from harm.”