Moneywise investigation: abuse of the elderly
Violet* was in her mid-eighties when her 90-year-old husband Malcolm had a stroke. He survived, but was in need of extensive care so, while he was in hospital, Violet went home to try to organise a nursing home. Little did she know that this would spell the end of their relationship.
When Violet returned to the hospital, she discovered that Malcolm’s estranged daughters had put him in retirement accommodation. A few days later, she then received a divorce petition, signed by her husband. “This was clearly to obtain money from the wife’s estate as she was very wealthy,” explains Susan Midha, a partner at Adam & Remers, Violet’s solicitor.
However, it was hard to prove that Malcolm had acted against his will. “He had a mental assessment and the problem was that I had to conclude he had full capacity. I couldn’t prove that he had been influenced by his children,” Midha says.
The divorce went through and £180,000 was granted to Malcom’s children. “This caused major anxiety for Violet and she was concerned that she would not even be notified if he had died, which was sad for her after so many years of marriage,” adds Midha.
What happened to Violet is not as rare as you’d hope. Tens of thousands of elderly people every year are victims of financial abuse, having money stolen, pressured into making gifts and re-writing their wills, and forced to sign away their property by people they love and trust.
You won’t hear many people talking about financial abuse, but it’s the second most common form of elder abuse after neglect – and more prevalent than physical abuse. According to the charity Action on Elder Abuse, 20% of the calls to their helpline are about financial abuse.
In 2006, 471 calls revealed that £2,108,236 had been stolen, defrauded or coerced from elderly victims. Some 18 houses had also been sold or taken without consent and 13 given away under pressure.
More worrying, a report by King’s College London and the National Centre for Social Research (conducted on behalf of Comic Relief and the Department of Health), concluded that at least 57,000 people aged over 66 had experienced financial abuse by a friend, relative or care worker in the past year. And researchers fear this is just the tip of the iceberg.
Financial abuse tends to go hand in hand with increasing age and deteriorating health. According to the King’s College study, those living alone or who have care provided for them in their homes are most at risk. They are likely to be frail and dependent on others.
“I had a case where a neighbour persuaded an old lady to make a will after her husband had died,” explains Susan Midha. “She was blind and relied on her neighbour to help her out so she felt obliged to do so. She ended up leaving all her estate to the neighbour, leaving her next-of-kin locked out of the will.”
Children commit abuse
While it’s awful to think your elderly parents or grandparents could be subjected to something like this, the horrifying truth is that most perpetrators are the sons or daughters of the victim. Midha says many abusers believe they have a right to their victim’s belongings and defend their actions with arguments like “mum would have wanted me to have more”.
While the majority of financial abuse takes place in people’s homes, cases also occur in care institutions. Julie Bennett, an NHS Trust ward manager from East Anglia, explains that it’s not uncommon for random visitors or distant relatives to take an unexpected interest in an elderly person’s welfare: “A neighbour, for example, pretending that they are taking care of their bills and asking them to sign a document. Things also tend to go missing.”
Staff at care homes and other service providers have also been known to take advantage of frail and elderly people, despite strict rules designed to prevent this. Helen Dempsey, a former nursing home assistant, reveals what no local council or politician likes to admit. “Unfortunately, there are too many people all too ready to take advantage. I’ve known staff members steal from residents and service providers overcharge. Taxi firms are the worst culprits,” she says.
There have also been reports about elderly people being financially abused by professionals such as financial advisers. This happened to Lynn*. When she was 82, she was diagnosed with early-stage Alzheimer’s disease. She was introduced to a financial adviser by a friend.
The adviser said he would sort out her finances free of charge. He visited several times, taking papers away or destroying them. He then advised Lynn that the money she had on deposit with National Savings & Investments should be used to buy an investment bond, which was later found to be a medium-risk product investing in stocks and shares. Lynn couldn’t recall anything about the transaction and there was nothing among her documents about the sizeable commission paid to the adviser.
Midha explains: “The problem here was that Lynn was starting to feel that her independence was being eroded as a result of her illness, and she was encouraged by her financial adviser, who ignored information from her lawyers which stated that there were doubts about her capacity.”
There’s no end to the stories, and unfortunately it looks as though financial abuse of the elderly is unlikely to go away. In fact, new technology makes it easier for those who ‘support’ elderly friends and relatives to take advantage.
Pensioners used to go to the Post Office to withdraw their pension. Now, it’s paid straight into an account, which has a PIN number. While PIN numbers do offer increased protection from fraud, they’re not easy for the elderly and frail to grasp, particularly if they have more than one number to remember. They are therefore more likely to hand over banking details to trusted carers or loved ones.
However, in doing this, they lose all right to protection in the event of theft.
Paul Ross, director of retail banking at the British Bankers’ Association, agrees it’s a problem: “The bank will pick up unusual transactions, and each case has to be judged on a case-by-case basis. But if a customer gives away their PIN, the bank would say they are liable.”
Experts also say the problem is not a priority for the government. “Progress has ground to a halt due to lack of funding as it’s not a huge vote winner,” says Nicola Plant, a partner at law firm Thomas Eggar. “We need more support, protection and resources.”
Elderly people are often left to fend for themselves. But how can you safeguard yourself or an elderly relative from becoming a victim? Forward planning while you’re not vulnerable is crucial, says Plant. “The difficulty comes when you don’t have the capacity to make decisions.”
One area where it pays to take great care is when granting power of attorney. This is when you give one or more people the power to manage your personal affairs should you become unable to do so. A whopping 10-15% of registered enduring powers of attorney are used as vehicles of abuse, according to Solicitors for the Elderly, whose members specialise in cases involving the elderly.
So it may be worth appointing a solicitor to monitor the situation, conduct an annual audit of funds and prevent money being used inappropriately. Be aware of rogue solicitors though, warns Plant. “I had a case where a son and daughter both wanted power of attorney to be applied to them but our client didn’t want either of them. So they wheeled her off to another solicitor.”
Cases of financial abuse tend to be massively under-reported. The victim is often too scared or ashamed to report it, particularly if their abuser is a member of the family. As Midha explains: “They tend to be very dependent on their abuser. Who would do the shopping, for example, if they got caught?”
This should not, however, be seen as an excuse for financial abuse – it is, after all, a crime with dire consequences for the victim. Older people have neither the time nor opportunity to recover from the experience. In fact, being financially abused could prove to be so traumatic, it could shorten their lives.
* Names have been changed to protect victims’ identities.
If you have been financially abused then remember, you don’t have to face the problem alone. Abusers thrive on the assumption that their victim is too scared to seek help.
If you feel threatened, call 999. For less urgent advice, contact the Citizen’s Advice Bureau or the social services in your local area.
Signs that financial abuse may be occurring:
• Signatures on cheques that do not resemble the older person’s signature
• Sudden changes in bank accounts, including large unexplained withdrawals
• Additional names on the bank account
• Abrupt changes to or the sudden establishment of wills
• The appearance of previously uninvolved relatives claiming rights to an older person’s affairs or possessions
• An unexplained or sudden transfer of assets to a relative or someone outside the family
• Numerous unpaid bills and overdue rent when someone is supposed to be attending to these payments on the older person’s behalf
• Unusual concern that an excessive amount of money is being spent on the care of the older person
• Absence of items such as a TV or personal grooming tools that the person should be able to afford
• The unexplained disappearance of money or valuable possessions such as art or jewellery
• Deliberate isolation of an older person from friends and family resulting in the caregiver having total control
Source: Action on Elder Abuse
Issued by life companies and designed to produce medium- to long-term capital growth, but can also be used to pay income. The minimum investment is typically £5,000 or £10,000 and your money is invested in the life company’s investment funds, so the bond can either be unit-linked or with-profits. They offer a number of tax advantages, such as the ability to withdraw up to 5% of the original investment amount each year without any immediate income tax liability. Also, a number of charges and fees apply, such as allocation rates, initial charges, annual charges and cash-in charges. As investment bonds are technically single-premium life insurance policies, they also include a small amount of life assurance and, on death, will pay out slightly more than the value of the fund.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
A financial adviser who is not tied to any financial services company (such as a bank or insurance company) and is authorised by the Financial Services Authority (FSA). They can advise on financial products to suit your circumstances. All IFAs have to give consumers the choice of paying by fees or commission and have to explain which would best suit the customer in that particular instance. Also, if commission is paid either by the client or the financial service provider recommended by the IFA, the IFA must disclose what that commission is.