Vulnerable Clients - How Can You Identify and Tackle Financial Abuse?
It is a sad fact that financial abuse of the elderly and vulnerable is often committed by someone in a position of trust, such as a carer, attorney or deputy. Solicitors have an important role to play in identifying and taking steps to rectify such abuse.
So what warning signs should you be on the lookout for, and what steps might you consider taking if you suspect someone may be at risk? In this article we set out some key considerations and practical tips for practitioners.
Early and Considered Action
The obvious warning signs of financial abuse include changes in clients' spending and income patterns, sudden involvement by relatives and unexplained cash withdrawals. More subtle indicators may include reluctance to communicate and to give instructions. If suspicions are aroused, it goes without saying that practitioners must broach this subject with care and sensitivity.
Swift action is then key. This may involve seeking urgent injunctive relief. However, practitioners can find themselves in a difficult position, particularly when the suspected perpetrator is a close family member or friend. The steps which might rightfully be taken to protect a vulnerable person may end up causing them emotional distress if they are dependent upon the perpetrator's care and support. It is crucial to bear this in mind when considering intervention.
Possible Intervention
Evidence of the client's capacity is critical in financial abuse claims. In practice, where financial abuse is discovered during a victim's lifetime, it can be difficult to obtain the necessary medical evidence if the vulnerable person is being isolated from friends and family. Intervention from the Court of Protection (CoP) may therefore be required to gain access to the victim.
However, if the perpetrator is an attorney or deputy, practitioners may first wish to consider making a referral to the Office of the Public Guardian (OPG). The OPG have statutory powers to investigate and thus more authority than practitioners. This can overcome the difficulty in obtaining a capacity assessment when the victim has been isolated.
Building a good rapport with the OPG investigator and speaking to the doctor carrying out the capacity assessment can be beneficial, as can providing evidence from your client as to why they believe the protected party (P) does not have capacity, to be considered by the doctor.
Any information provided to the OPG as part of an investigation is strictly confidential. In our experience, a referral to the OPG can therefore help to preserve relations with the victim, who might perceive an intervention by the concerned person as offensive or an unwarranted attack and inadvertently play into the hands of the perpetrator.
The OPG also have the power to apply to the CoP for the suspension, discharge or replacement of a deputy or the revocation of a power of attorney.
Other safeguarding measures to consider include making a referral to the Local Authority Adult Safeguarding team and informing the police where you believe a crime has been committed.
The Role of the Court of Protection
The appointment of a property and financial affairs deputy may be appropriate where, for example, an attorney is abusing the trust of P and misappropriating assets. Under the jurisdiction of the CoP, P must of course lack capacity within the meaning of the Mental Capacity Act 2005 (MCA) and practitioners will be familiar with the best interest test and the section 4 factors. The role of the deputy is to investigate the transactions and ascertain whether the victim had the capacity to make them at the relevant time. Akin to Beddoe relief, the deputy may seek directions from the CoP as to whether to issue a claim to set aside gifts and may also seek an account of dealings.
Where a deputy/attorney is the perpetrator, an application to the CoP to revoke the LPA (under s22 MCA) or to remove the deputy under (s16 (8) MCA) may be necessary, on the basis that they are not acting in P's best interests.
Undue Influence
A victim does not always lack capacity in financial abuse cases. We are seeing an increasing number of cases involving undue influence. In the context of lifetime gifts, practitioners will be familiar with the principles set out in the case of Royal Bank of Scotland v Etridge (AP) [2001] and the two methods of proving undue influence.
The legal burden of proving undue influence rests with the person alleging it. Actual undue influence cases rarely succeed because they require proof of overt pressure which has often occurred behind closed doors.
More typically, challenges to lifetime gifts are brought on the basis of presumed undue influence. Here the evidential burden shifts to the defendant, provided the claimant demonstrates that there was a relationship of trust and confidence between the donee and donor and that the size and/or nature of the transaction calls for explanation. An important consideration is the quality of any independent advice given to the donor, which may or may not be determined to be sufficient to enable the donor to make a free and informed decision.
Where Wills are concerned the position is different; there is no claim based on presumed undue influence.
In Practice
Financial abuse is very difficult to detect and often only comes to light on death when it is too late. It is then left up to the personal representatives to take action to rectify the position. In our experience, it is not uncommon to find that the perpetrator, who has benefitted from the wrongdoing, has also been appointed as PR. In those circumstances, the beneficiaries of the estate (in a derivative action) may be entitled to bring a claim.
With an ageing population and rapid advances in the capabilities and use of technology, it is likely practitioners will face increasing numbers of these types of claims and must remain ever-vigilant.
Practitioners may also wish to refer to the relevant Law Society guidance on this topic.