Financial Abuse: Protecting the Vulnerable
Financial abuse is a serious issue that predominantly affects elderly and vulnerable individuals. It often involves the unlawful or unethical taking or manipulation of money or assets by relatives, friends, or hired help such as carers or gardeners. In many cases, financial abuse occurs when there is a lasting power of attorney (LPA) in place, giving the abuser access to the victim’s finances.
During the COVID-19 lockdowns, incidents of financial abuse surged as vulnerable individuals were isolated and family members were unable to check in on their well-being. This article explores the nature of financial abuse, the legal frameworks in place to address it, and practical steps you can take if you suspect someone you know is a victim. As a direct access barrister, I can help you navigate these complex issues.
Understanding Financial Abuse
Financial abuse can take many forms, including:
- Direct Theft: Money or valuables are taken without the victim’s knowledge or consent.
- Manipulation of Finances: The abuser gains control over the victim’s bank accounts, credit cards, or financial documents.
- Unlawful Gifts or Transfers: The victim is coerced or manipulated into giving away money or property.
- Misuse of Power of Attorney: The person with LPA misuses their authority to benefit themselves at the expense of the vulnerable person.
Common Scenarios
Scenario 1: Relative Abusing Power of Attorney
Mr. Smith, an elderly man with mild cognitive impairment, appointed his son, John, as his attorney under a lasting power of attorney. John started withdrawing large sums of money from Mr. Smith’s bank account, justifying it as necessary for “expenses.” However, Mr. Smith’s daughter, Jane, noticed irregularities in the accounts and suspected John of financial abuse. Upon investigation, it was revealed that John had been using the money for personal expenses and investments, leaving Mr. Smith with insufficient funds for his care.
Scenario 2: Hired Help Exploiting Isolation
During the COVID-19 lockdown, Mrs. Brown, an elderly widow, was isolated from her family. Her gardener, Mr. Green, offered to help with her finances. Over time, Mr. Green convinced Mrs. Brown to transfer significant sums of money to him, under the guise of “investments.” Mrs. Brown’s children, unable to visit her due to lockdown restrictions, later discovered the exploitation when they reviewed her bank statements and found numerous large transfers to Mr. Green.
Legal Frameworks and Protections
Financial abuse can be addressed through several legal mechanisms:
- Lasting Power of Attorney (LPA): LPAs are designed to protect individuals who may lack capacity in the future. However, they can be misused. The Office of the Public Guardian (OPG) oversees the use of LPAs and can investigate allegations of abuse.
- Court of Protection: This court can make decisions on financial or welfare matters for individuals who lack capacity. It can also revoke an LPA if it is being misused.
- Civil Actions: Victims or their representatives can bring civil actions to recover lost assets or seek damages for financial abuse. This often involves claims of undue influence, breach of fiduciary duty, or fraudulent transactions.
Key Cases
Blythe v. Blythe [2023] EWHC 1085 (Ch)
In this case, an adult child used an LPA to make a substantial gift to himself from his parent’s estate. The court upheld the gift, finding no evidence of undue influence or lack of capacity at the time of the transaction.
Azam v. Molazam [2023] EWHC 2202 (Ch)
This case involved a vulnerable individual transferring property to a relative at an undervalue. The court initially set aside the transfer on the basis of presumed undue influence but was later overturned on appeal. The court concluded that vulnerability alone does not establish undue influence without a resulting relationship of influence.
Hodson v. Hodson [2006] EWHC 2878 (Ch)
In this case, a son/attorney and wife/carer were found in breach of their fiduciary duties for failing to demonstrate that transactions made on behalf of the vulnerable person were fair and freely entered into.
Practical Steps to Take
If you suspect financial abuse, consider the following steps:
- Gather Evidence: Document any suspicious transactions, gather bank statements, and note any irregularities.
- Report to the OPG: If an LPA is involved, report the suspected abuse to the Office of the Public Guardian.
- Seek Legal Advice: Contact a direct access barrister who specialises in financial abuse cases for expert advice on the best course of action.
- Consider Court Action: If necessary, consider bringing a civil action to recover assets or seek damages.
Protect Your Loved Ones
If you suspect that a loved one is a victim of financial abuse, it is crucial to act quickly. Financial abuse can have devastating effects on the victim’s well-being and financial stability. As an experienced direct access barrister, I can provide the expert legal advice and representation you need to protect your loved one and recover lost assets.
Contact me today for a confidential consultation. Together, we can assess your case, explore your legal options, and take the necessary steps to stop the abuse and seek justice.