This second part of our guide builds on Part 1’s foundational concepts by providing a practical, structured response model for financial advisers.
It outlines specific steps—recognition, response, referral, and reform—designed to help advisers uphold ethical and legal obligations while supporting vulnerable clients. Whether facing suspected elder abuse, coercive control, or complex family dynamics, this guide equips advisers with the tools to respond professionally and compassionately.
Responding to Suspected Abuse
What to Do When Abuse Is Identified or Suspected
When a financial adviser suspects or identifies elder or domestic financial abuse, they have a professional, ethical, and regulatory obligation to act.
The following structured approach reflects the best practices recommended in the Law Council of Australia’s Best Practice Guide for Legal Practitioners about Elder Financial Abuse (2023) and various NSW Government Sources and is adapted to the financial services context.
Immediate Professional Actions
Documentation and Recording
- Record all observations, concerns, and evidence of abuse in real-time.
- Note specific incidents, dates, and patterns that raised concern.
- Identify any witnesses or third parties present.
- Maintain records securely and in line with privacy obligations.
Client Consultation
- Speak with the client privately in a secure, comfortable environment.
- Use open-ended, non-leading questions to understand the client’s views.
- Assess the client’s expressed wishes and any perceived risks.
- Document all responses and your impressions of their capacity and volition.
Capacity Assessment
- If concerns exist, refer the client for a professional medical assessment.
- Note known cognitive impairments, medical history, or medication. (Although, don’t let this bias you – perpetrators can use medical and medication history, especially for mental illness, to justify their control over the victim-survivor. This is where seeking a medical assessment or a second opinion will be useful).
- Review or request previous assessments where relevant.
Legal and Protective Steps
Immediate Safeguards
- Consider delaying or suspending transactions temporarily.
- Review or revoke suspect Powers of Attorney if permitted and appropriate.
- Discuss freezing accounts or applying alerts with your licensee’s legal team.
Legal Remedies
- Inform the client of their legal rights and options (with consent).
- Consider referring the client to a solicitor for urgent legal advice.
- Assist in preparing evidence for protective orders, if relevant.
Advisers should be alert to transactions that could constitute a misuse of an EPOA. If an attorney facilitates large transfers, alters legal ownership, or refuses oversight, advisers should discuss potential revocation of the EPOA or restriction of its scope with legal counsel. The Law Society of NSW notes that many such transactions fail to meet fiduciary standards and may constitute financial abuse. (LSJ, 2017)
In its submissions to government, the Law Council has proposed model EPOA provisions that require: (a) informed decisions by the principal, and (b) mandatory acknowledgement of duties by the appointed attorney. Advisers should expect future regulatory settings to align with these standards and anticipate reforms by updating internal practices accordingly. (Law Council, 2021)
Reporting and Referral
Mandatory Reporting Obligations
- Know your jurisdiction’s obligations (e.g., in some states, reporting is mandatory for specific professionals).
- Document all reports made and retain evidence of referral or follow-up.
Support Services Referral
- Provide the client with access to:
- Elder abuse helplines
- Financial counselling and advocacy services
- Domestic violence or mental health supports
- Legal aid or community legal centres
Ethical and Professional Considerations
Ethical Duties
- Revisit Code of Ethics standards, especially Standards 2, 5, and 12.
- Manage conflicts of interest diligently.
- Clearly document the ethical basis for each decision, particularly where judgment or discretion is exercised. Use the Code of Ethics as a reference point.
- Solicitors are bound by professional conduct rules that prioritise the client’s autonomy, dignity, and welfare above competing interests. While governed under a separate regime, financial advisers bear an equivalent ethical duty. Drawing from the Law Society of NSW’s commentary, advisers should apply similar vigilance, ensuring advice is independently formed, informed, and freely given. (LSJ, 2017)
Risk Management
- Seek peer consultation or escalate to compliance/legal.
- Review whether professional indemnity insurance covers the situation.
- Maintain a file of all risk management steps and communications.
Practical Protection Measures
Financial Safeguards
- Re-evaluate existing account structures and authorisations.
- Implement enhanced account monitoring or restricted access measures.
- Recommend appointing an independent financial administrator or guardian.
Building Support Networks
- Help the client reconnect with trusted family, friends, or carers.
- Encourage regular check-ins or monitoring mechanisms.
- Develop a tailored safety or contingency plan.
Follow-Up Actions
Monitoring and Reassessment
- Arrange regular follow-up meetings.
- Schedule a follow-up meeting within 4 weeks to review whether the agreed-upon measures are effectively protecting the client. Adjust as needed.
- Keep notes of progress or additional concerns.
Long-Term Planning
- Update financial plans and legal documents to reflect new arrangements.
- Assist in documenting long-term care or financial preferences.
- Plan for future reviews and ongoing oversight.
Professional Communication
With the Client
- Use plain language in verbal and written communication.
- Confirm key points in writing and document the client’s understanding.
- Respect their autonomy wherever safe and reasonable.
With Other Professionals
- Share relevant information (with client consent) with legal, health, and aged care professionals.
- Maintain a record of who was contacted, when, and the outcome.
- Ensure coordination is ethical, documented, and in the client’s best interest.
Remember: the goal is to protect the client’s financial interests, respect their autonomy and dignity, and safeguard their well-being.
Drawing from the Law Council of Australia’s Best Practice Guide for Legal Practitioners about Elder Financial Abuse (June 2023), advisers can strengthen their safeguards by emulating legal professionals’ focus on clarity, capacity, and independence. That guide emphasises the importance of taking instructions directly from the client, consulting with them privately, and remaining alert to signs of undue influence or unconscionable conduct. These responsibilities mirror the adviser’s duty to act in their client’s best interests and prioritise the client’s welfare above all other considerations.
In Ryan v Dalton (Ryan v Dalton; Estate of Ryan [2017] NSWSC 1007), the court highlighted that professionals must constantly assess capacity and consider the potential for undue influence. The case involved disputed testamentary documents, with Justice Kunc observing, “a solicitor should always consider capacity and the possibility of undue influence, if only to dismiss it in most cases.” Advisers should adopt a similar mindset. Mental capacity assessments are not optional, especially when transactions involve significant asset transfers or changes to long-standing financial arrangements.
Capacity and Volition: What Advisers Should Do
Mental Capacity Assessment
- Recognise that no single legal test exists, but capacity is transaction-specific.
- Ensure the client comprehends the nature and implications of the financial decision.
- Use open-ended questions (e.g., “Why are you doing this?”, “Talk me through what you understand about this.”) to probe understanding.
- Avoid yes/no questions that limit genuine reflection.
Advisers should be aware that capacity is both transaction-specific and context-dependent. The legal threshold for understanding varies—clients may be able to make day-to-day financial decisions but not execute significant asset transfers or powers of attorney. This aligns with guidance in Gibbons v Wright (1954) 91 CLR 423 and is reinforced in LSJ’s guidance that the assessment must be tailored to the type of transaction involved. The Law Society of NSW’s guidance on enduring powers of attorney cautions that different transactions, such as making a gift or altering ownership, may require a higher level of understanding. (LSJ, 2017)
Volition Assessment
The Law Society of NSW underscores that maintaining client autonomy is the foundation of ethical professional practice. Advisers must take active steps to ensure that clients can express their wishes without interference. This includes taking instructions directly, allowing sufficient time for reflection, and avoiding undue reliance on third-party confirmations. (LSJ, 2017)
- Confirm that the client’s decisions are voluntary and free from influence.
- Ask, “Has someone suggested this to you?” or “What do you think will happen?”
- Evaluate the consistency of instructions across time or appointments.
- Be wary of rehearsed language or guarded responses.
- The Law Society of NSW reminds solicitors that the best protection against undue influence is to take instructions directly from the client, in private, and over multiple engagements. Advisers should adopt the same standard, ensuring instructions are not rehearsed or externally influenced. (LSJ, 2017)
When In Doubt
- Seek a second opinion or medical advice if cognitive impairment is suspected.
- Encourage multiple meetings to assess understanding and consistency over time.
- Consult colleagues (de-identified if necessary) to challenge or validate concerns.
- Greedy or manipulative relatives may rehearse or coach responses, particularly when they accompany the client to meetings. Repeated, private consultations with the client, over time and without the presence of third parties, are essential to confirm that instructions reflect the client’s genuine, independent will. This approach helps advisers spot inconsistencies and reduces the likelihood of abuse going undetected. (LSJ, 2017)
Documentation Requirements
- Record all capacity-related questions and the client’s responses.
- Note any unusual behaviours or inconsistencies.
- Keep track of medical disclosures or conditions that may affect judgment.
- Document decisions to proceed or defer action based on capacity concerns.
As an adviser, you. should approach capacity and volition as a continuum requiring active, not passive, engagement. Thoughtful, documented diligence protects clients—and protects advisers from disputes, complaints, or regulatory scrutiny.
Drawing from the Law Council of Australia’s Best Practice Guide for Legal Practitioners in Relation to Elder Financial Abuse (June 2023), advisers can strengthen their safeguards by emulating legal professionals’ focus on clarity, capacity, and independence. That guide emphasises the importance of taking instructions directly from the client, consulting with them in private, and remaining alert to signs of undue influence or unconscionable conduct. These responsibilities mirror the adviser’s own duty to act in their client’s best interests and to prioritise the client’s welfare above all other considerations.
Advisers should adopt a similar vigilance when assessing whether a transaction is freely entered into, whether the client has full understanding and volition, and whether third-party influence might be undermining informed consent.
Like solicitors, financial advisers are expected to exercise independent judgement and maintain objectivity when acting on behalf of their clients. The Law Society of NSW emphasises that professionals should be particularly cautious when older clients present with complex family dynamics or are accompanied by individuals who may have conflicting interests. These same risks apply in the financial services context and warrant proactive engagement and, where necessary, appropriate escalation.
1. Speak with the client privately. Advisers should always attempt to have one-on-one conversations with clients where vulnerability is suspected. This not only meets AFCA’s expectations but creates a safe space where the client may disclose coercion or uncertainty. For licensees, embed this into client meeting protocols and provide advisers with language prompts or scripts to manage these conversations delicately. If privacy cannot be ensured, the meeting should be rescheduled, or the adviser should follow up by phone or in writing.
2. Verify legal authority documents. Advisers must verify the legal validity of documents such as Enduring Powers of Attorney (EPOAs) or Guardianship Orders, including registration status where applicable. This includes checking whether the person acting under the authority is acting within its bounds and in the client’s interest. Licensees should provide access to legal or compliance support for document review and maintain a register of validated authority documents. Additionally, advisers should assess whether the attorney is acting within their legal limits and not deriving personal benefit. According to the LSJ, attorneys owe fiduciary duties to act solely in the principal’s best interests. Unexplained asset transfers or gifts made under an EPOA should be treated as high-risk indicators requiring further scrutiny. (LSJ, 2017)
Particular care must be taken to assess whether the individual acting under the EPOA is operating within the lawful limits of their authority. The LSJ highlights that attorneys must act in the principal’s best interests and not profit personally. Gifts and asset transfers that benefit the attorney—especially without the principal’s explicit consent or a history of such transactions—should raise red flags.
3. Pause or delay transactions if concerned. Where red flags are present, such as sudden large withdrawals or client confusion, advisers should delay the transaction under the licensee’s temporary hold policy. Licensees should create a documented process that gives advisers discretion to place holds pending further review. This protects the client and the adviser, aligning with ASIC’s guidance on acting fairly and efficiently.
4. Escalate concerns internally. Advisers must follow internal escalation protocols and involve compliance or management early. Licensees should ensure these protocols are easy to follow, include clear reporting lines, and support a non-retaliatory culture that encourages speaking up. A central vulnerability register may be useful to monitor patterns and systemic risks.
5. Document thoroughly. Advisers should maintain comprehensive file notes including the rationale for decisions, evidence reviewed, and actions taken. Templates for documenting suspected abuse should be developed and mandated by licensees. This documentation forms a critical part of audit trails, internal reviews, and potential AFCA or regulatory matters.
6. Refer to support services or regulators as needed. Advisers must be familiar with referral pathways and know when and how to connect clients with services such as
- 1800RESPECT, National sexual assault, domestic and family violence counselling service
- Legal Aid NSW – State-based legal assistance directory
- Elder abuse helplines
- Financial Abuse Services or
- The Office of the Public Advocate.
Licensees should maintain and periodically review an up-to-date referral list and consider adding this to CRM systems for quick access. Where serious risk exists, privacy laws allow disclosure to prevent harm, and advisers should be supported with legal advice on when this applies.
Handling Gifts and Benefit
Advisers should adopt the same caution as solicitors in relation to gifts and financial benefits from clients. Substantial gifts may signal coercion or attempts to manipulate the adviser’s conduct, particularly where clients are vulnerable. Advisers should evaluate such situations critically and record their decision-making process. Licensees should implement policies prohibiting the acceptance of gifts above a reasonable threshold, similar to the solicitor’s ethical standards under Rule 12 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015. The LSJ emphasises that even modest gifts may be challenged if they are made under undue influence or without clear evidence of capacity. Advisers should assess whether the client genuinely understands the implications of the gift and whether it is consistent with their usual financial behaviour.
In relationships of dependency or trust, courts may presume undue influence unless rebutted. (LSJ, 2017).
The LSJ warns that even seemingly benign gifts can become the basis for legal challenges if they are not demonstrably voluntary and informed. Advisers should refer to legal support when gifts are substantial, appear inconsistent with prior client behaviour, or are directed to those exercising authority under a power of attorney. The presumption of undue influence may apply in relationships of dependence or control.
International Best Practices
- UK FCA Guidance: Emphasis on embedding vulnerability across business practices. The FCA’s Guidance (FG21/1) requires firms to integrate vulnerability into all aspects of service delivery—from product design to staff training and complaint handling. Advisers should consider adopting a similar approach by implementing policies that proactively identify and support clients experiencing vulnerability. Regular vulnerability assessments, inclusive communication strategies, and flexible service models are key features we should emulate.
- US FINRA/SIFMA: Trusted contact requirements and transaction hold powers. Under FINRA Rules 2165 and 4512, US advisers are encouraged to collect details of a ‘trusted contact’ and are permitted to temporarily hold disbursements if financial exploitation is suspected. Australia lacks a statutory equivalent, but advisers should consider adopting a voluntary ‘trusted contact’ mechanism with client consent. Moreover, licensees should implement internal procedures that allow advisers to pause transactions when abuse is suspected, mirroring the US safe harbour approach.
- OECD: Encourages inter-agency cooperation and tailored consumer protections. The OECD’s guidelines stress the importance of whole-of-government approaches to elder financial protection, integrating regulatory, financial, health, and legal sectors. Australian firms can adopt this principle by building partnerships with elder abuse hotlines, legal aid, aged care services, and community organisations. Advisers should be trained not only to identify abuse but to refer clients appropriately within an informed and supportive network.
Documentation and Ethical Record-Keeping
According to the Best Practice Guide for Legal Practitioners, legal professionals are expected to retain detailed, contemporaneous records of instructions, observations, advice, and any doubts raised during consultations. These practices align with financial advisers’ own obligations under the Code of Ethics and serve as essential evidence of integrity and diligence. Advisers should also consider whether medical advice is needed when capacity is unclear, and always ensure that all records are accessible, legible, and securely retained to meet legal and professional obligations.
Consistent with guidance provided to solicitors, advisers must treat comprehensive documentation as a core part of their ethical practice. Clear records of client interactions, rationale for advice, and any concerns about capacity or influence are essential—not only for dispute resolution but for demonstrating the adviser’s commitment to the client’s best interests.
When working with EPOAs, advisers should document not only their review of the document itself but also any contextual concerns, such as timing of execution, recent changes in control over finances, or behavioural changes in the client. As highlighted in the LSJ, these records may later prove essential in validating that the adviser acted ethically and in accordance with their professional duty. As the LSJ article notes, these records may become crucial in defending the adviser’s ethical position and protecting the client’s financial wellbeing. LSJ, 2017
Conclusion and Next Steps
Protecting elderly clients and those facing domestic financial abuse isn’t just a compliance tick-box – it goes to the heart of the adviser’s ethical duty and the promise of “client best interest” that underpins our profession. In Australia, the legal and regulatory framework is increasingly clear: advisers and licensees are expected to be proactive, vigilant, and compassionate when it comes to vulnerable clients. From the Corporations Act’s fairness obligations to the ASIC Code of Ethics standards and AFCA’s evolving approach, the message is consistent – do the right thing by your client, especially when they need you most.
By understanding what elder and domestic financial abuse look like, you can recognise early warning signs. Take confident, defensible action—ASIC, AFCA, and the law stand behind advisers who act ethically and decisively in clients’ best interests. By implementing practical tools – checklists, policies, training, and referral resources – you create an environment where neither you nor your colleagues will be caught off guard when a difficult situation arises. Instead, you’ll have a plan to identify, address and mitigate the abuse, potentially stopping a financial tragedy and certainly making a positive difference in your client’s life.
As you finish reading this guide, consider conducting a self-assessment or team discussion: Are our current processes sufficient to catch and respond to potential elder or financial abuse? If not, use the actionable steps provided here to shore up those defences. Perhaps update your client intake forms to include a vulnerability question, or schedule a training on the ABA’s financial abuse guidelines. Even small steps can significantly improve client outcomes.
Despite comprehensive frameworks and professional vigilance, abuse can still occur—particularly when safeguards are circumvented by individuals who understand how to manipulate perception and process. As the LSJ warns, elder abuse is often subtle and opportunistic, and no single safeguard is infallible. Advisers must stay alert to changing circumstances and remain willing to challenge assumptions, even in long-standing relationships. LSJ, 2017
In an industry built on trust, there is no greater trust than that placed in us by clients who may be unable to fully protect themselves. By championing their rights and safety, we uphold the highest ideals of our profession and, importantly, we also reduce risks for our business. It truly is a win-win: what’s good for the client in these scenarios is good for regulatory compliance and long-term adviser-client relationships.
Let this guide be the starting point for further reflection and action. Stay informed on new developments – ASIC, AFCA, and industry bodies continue to refine expectations around vulnerability (for instance, AFCA is actively consulting on its approaches to family violence and financial abuse) and it’s likely we’ll see even more clarity in the near future. Be ready to update your knowledge and policies accordingly.
Ultimately, financial advice is about helping people secure their financial well-being. That mission must include shielding clients from those who would undermine their security through abuse. With the information and tools provided here, you can confidently play your part in detecting abuse early, responding effectively, and making a meaningful difference in the lives of vulnerable clients.
Need Support?
If you’re unsure how to respond to client vulnerability, we’re here to help. Contact Assured Support for tailored checklists, team training, or policy support.
Visit assuredsupport.com.au for more tools and templates, or reach out to discuss how your current arrangements stack up.
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Frequently Asked Questions
1. What should a financial adviser do if elder financial abuse is suspected?
Financial advisers must act ethically and professionally by documenting concerns, consulting the client privately, assessing capacity, and referring the case to legal or protective services. It’s essential to delay suspicious transactions and escalate through internal compliance channels.
2. How can advisers assess a client’s mental capacity and volition?
Mental capacity is transaction-specific. Advisers should use open-ended questions to evaluate understanding, monitor for inconsistencies, and consult medical professionals if impairment is suspected. Ensuring decisions are free from coercion is critical to ethical practice.
3. Are financial advisers allowed to delay transactions if abuse is suspected?
Yes, advisers can pause or delay transactions under internal protocols to protect the client. Many licensees implement temporary hold policies to allow further investigation, aligning with best practices and ASIC’s guidance on client-first duties.
4. What legal obligations do advisers have when dealing with Enduring Powers of Attorney (EPOA)?
Advisers must verify the validity of EPOAs, ensure the attorney is acting within legal bounds, and monitor for misuse. Any suspicious activity, such as large transfers or gifts, should be reviewed with legal counsel and may warrant revocation or restriction.
5. What resources should advisers provide to vulnerable clients facing abuse?
Advisers should refer clients to elder abuse helplines, domestic violence support services, financial counselling, and legal aid. Keeping an up-to-date referral list ensures clients can access the help they need promptly and confidentially.
