"Legal action can be taken to recover the funds of those who have suffered financial abuse, but often, the money has been wasted or put beyond reach."
A leading barrister recently revealed that elderly people, particularly those who suffer from dementia, are particularly likely to be financially abused.
Ruth Hughes from 5 Stone Buildings Chambers spoke at the London Deputy Day 2019 conference, an event dedicated to educating professional deputies, teaching them best practice and sharing relevant legislation updates.
Professional deputies act on behalf of people who are unable to act for themselves, often following a life-changing accident. They could be lawyers, accountants or in some cases, a family member, and they handle the financial affairs of people with reduced capacity, as well as help to make key decisions for them.
Said Ruth: “Financial abuse is becoming, sadly, an increasingly prevalent problem.
“People who have dementia are particularly at risk of financial abuse because they may be lonely or vulnerable – but primarily because they cannot manage their own financial affairs and thus would require a deputyship. Through that, they can be persuaded to make inappropriate gifts, wills or lasting powers of attorney.
“Unfortunately, however, there are many more types of people at risk – generally speaking, most people who would require a deputy to act on their behalf could be open to financial abuse.
“Family members or “friends” who have been given power over property and finances can abuse the trust placed in them, or manage their finances or property incompetently, or neglect to act at all. Such action can mean that vulnerable people are left without the resources they need, and their quality of life is significantly reduced.”
Financial abuse is defined as “the illegal or unauthorized use of a person’s property, money, pension book or other valuables (including changing the person’s will to name the abuser as heir), often fraudulently obtaining power of attorney, followed by deprivation of money or other property, or by eviction from their own home.”
Ruth described a case in which someone had suffered a brain injury, and appeared fully competent – but, in fact, his decision-making skills and ability to accurately assess situations had been severely damaged.
Once he had received the large settlement sum awarded to him for his injury, he considered it to be “like winning the lottery”, and boasted to his friends about how much money he had.
He obtained a large amount to spend on a gift for his daughter, but spent it elsewhere and also bought himself a van – despite not being able to drive.
His behaviour as a result of his brain injury left him vulnerable to financial abuse.
This presented a complex problem to Ruth, as she explained: “It raises the question – in instances such as these, should the claimant in fact be told about the amount of money they have been awarded? In this case he was not.”
“Legal action can be taken to recover the funds of those who have suffered financial abuse, but often, the money has been wasted or put beyond reach.”
However, it’s not all doom and gloom, as Ruth offers some sound advice for people seeking deputyship:
“Using a professional as an attorney limits the risk of abuse very substantially.”
“Make sure you do as much due diligence as possible and ensure you are working with someone who has a demonstrated history of protecting the needs and interests of vulnerable people.”
Under a new UK directive, the impact of financial abuse will be legally recognised as domestic abuse and can be reported as a crime. Legal guidance for prosecutors will be changed to ensure cases of financial abuse can be successfully prosecuted where appropriate.
Deputy Day is hosted each year by Frenkel Topping, a specialist independent advisor. It advises many of the UK’s leading law firms and barristers on settlements and investments for their clients – and manages the finances of people who are unable to act for themselves following life-changing accident or personal injury, who therefore may be vulnerable to financial abuse.