AFCA have published its updated Approach to family violence and Approach to financial abuse of older people following a comprehensive consultation process. AFCA have:
- expanded and refreshed the Approach to family violence, which will replace AFCA’s existing Approach to joint accounts and family violence
- revised and updated the Approach to financial abuse of older people, which will replace the superseded Approach to financial elder abuse.
I have extracted the parts of the Approaches relevant to General Insurance however the full Approaches should be considered and can be accessed here.
The AFCA Approach to family violence
What is family violence?
The Family Law Act 1975 (Cth) defines family violence as:
“…violent, threatening or other behaviour by a person that coerces or controls a member of the person’s family (the family member),or causes the family member to be fearful.”
Family violence can have serious and lasting effects on a person’s physical, psychological and financial wellbeing. These impacts may compound over many years. Family violence impact does not necessarily end when the relationship does. In some cases, it can begin or escalate after the relationship has ended.
Family violence refers to both intimate partner violence and violence between family members.
This includes (but is not limited to):
- physical, psychological, sexual and emotional abuse
- coercive control
- financial abuse
- parental or elder abuse
General insurance
Family violence in the misuse of insurance products is a growing risk. Insurance policies can be exploited to perpetrate abuse by changing or cancelling policies, changing beneficiaries, restricting access to information, interfering with the claims process, or preventing victim-survivors from obtaining a payout.
Warning signs of potential family violence and financial abuse
There are warning signs that a customer may be experiencing family violence and/or financial abuse specific to insurance products. These may include when one policyholder may:
- not understand, or is not aware, that:
> cover has been taken out in their name or covering their property
> they have been removed from a policy or the policy has been cancelled by a joint policyholder
- have concerns about protecting their personal privacy or safety or the security of their policies
- be reluctant to involve the other joint policyholder when making changes to the policy, making a claim or seeking hardship assistance.
Warning signs that a policyholder may be a perpetrator of family violence include that they:
- ask questions about a joint policyholder’s behaviour or activities
- request to remove the other joint policyholder from a policy or claim
- are reluctant to involve the other joint policyholder when making changes to the policy, making a claim or seeking hardship assistance.
Common issues that may arise
In the context of insurance, issues that may arise with jointly held policies in situations involving family violence, include:
- cancellation of the policy by one policyholder
- payment of benefits under a jointly held policy
- disadvantage to innocent co-insured by a perpetrator’s failure to disclose
- perpetrators forcing victim-survivors to pay an excess following an accident
- policies that may exclude damage to property by the perpetrator of family violence
- breach of identifying information of policyholder/s who may be experiencing family violence.
Principles for responding to family violence
AFCA’s Approach aims to align with evolving community expectations and good industry practice (including industry codes of practice and guidelines) relating to family violence. This includes, but is not limited to, the following general principles:
- Consider the context – understand victim-survivors are likely to be experiencing considerable stress and may need additional care. Financial firms should be:
> willing to work with customers individually to consider their unique circumstances and needs
> flexible in their approach, where possible
> mindful of any access, privacy, confidentiality, or safety concerns.
- Engage with care – engage with customers with sensitivity, dignity, respect and compassion, which may include referring customers to people, or services, with specialist training and experience.
- Prioritise safety – the safety and wellbeing of customers experiencing family violence must be a priority in financial firms’ communication, documentation and financial and account arrangements. This includes accepting disclosures of family violence at face value without requiring proof and working with customers to provide information in a flexible and sensitive way (including flexible timeframes).
AFCA considers these principles when dealing with complaints involving family violence.
The AFCA Approach to financial abuse of older people
Abuse of older people (also known as elder abuse) is described by the World Health Organisation (WHO) as ‘a single or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person.’It can take many forms, including physical, emotional, sexual, and financial abuse, as well as neglect.
In Australia, an older person is typically defined as someone aged 65 years or older, or 50 and older for First Nations Peoples.
There may be signs that an older person may be experiencing abuse. This can be physical signs, such as injuries, weight loss, poor hygiene and increased hospitalisations. They may also include subtle changes in behaviour, such as becoming confused, withdrawn, forgetful or evasive. Another sign is when an older person should be able to afford essentials like food, clothing or utilities, but cannot, due to the abuse.
Consumers, or individuals involved with a company or other type of small business, who experience family violence and financial abuse (other than abuse of older people) can also experience problems in financial services. The AFCA Approach to family violence sets out our approach to these issues.
Warning signs of financial abuse of older people
In complaints involving financial abuse of an older person, AFCA considers whether the financial firm missed signs of abuse and should have taken steps to reduce or prevent loss. It can be complex to determine whether the abuse was visible at the time and what actions the firm should have taken.
AFCA has observed the following warning signs in complaints involving financial abuse of older people. An older person may:
- engage in financial activity that is unusual or inconsistent with their long-standing patterns of financial activity
- be accompanied by someone who appears to pressure them into making financial decisions
- have a third party speak on their behalf, including in situations involving language barriers
- ask for communications to be sent to a third party, especially when that person is not formally authorised
- appear fearful (particularly of the person accompanying them) or withdrawn
- not understand or be aware of recent financial decisions (e.g. they are confused about why they are being asked to consent or sign a document)
- sign a guarantee of a company’s loan when they were not encouraged to obtain independent financial or legal advice about the guarantee
- be unable to explain, or appear confused about, their financial products or decisions
- register for online services despite having no prior history of online interactions
- express concerns about missing funds or financial documents.
Where these or other signs arise, financial firms should make further inquiries and proceed with caution. This may include delaying the processing of a customer’s request or taking other preventative steps. Should a financial firm have reasonable cause to suspect financial abuse, they should not require evidence before escalating the matter or considering what safeguards may need to be put in place, including reporting to the safeguarding bodies, as relevant to their jurisdiction.
The appropriateness of a financial firm’s response includes whether it took timely preventative, supportive and restorative action without first placing a burden on the customer to provide further information. Any additional safeguards introduced should be proportionate and sensitive to the older person’s circumstances.
Case study – Suspicious insurance claim
A complaint was lodged with AFCA after an insurer denied a home and contents claim for the theft of high-value items, which had been added to the policy only seven days earlier.
The complainant was an older person and there were indicators of vulnerable circumstances, including reliance on others for care, mental health challenges, and a language barrier. A family member impersonated the complainant to add the high value items to the insurance policy and later lodged the claim. The complainant filed a police report noting that she suspected a family member may have taken the items, this report was relied upon by the financial firm when declining the claim.
AFCA Approach
While the insurer acted on this information by appointing an investigator to assess the merits of the claim, it failed to consider them as warning signs of potential abuse, including impersonation and possible fraud.
AFCA considered these warning signs significant and relevant to the handling of the claim. While this information did not change the outcome of AFCA’s decision, which found in favour of the financial firm, AFCA considered that the financial firm missed an opportunity to identify warning signs of financial abuse of an older person particularly noting they were aware of her vulnerable circumstances
Insurance
Common issues that may arise
There are warning signs that an older person may be experiencing financial abuse which are specific to insurance products, including:
- third party involvement in claims where a caregiver, family member, friend or representative may manage the claims process, request payments to new accounts, or opt for cash settlements instead of repairs – potentially without proper authority or in ways that may not benefit the older person, for example if they are left with insufficient funds or are unable to manage the repairs
- where a cash settlement is accepted but repairs are not undertaken, the policyholder may face difficulties at renewal, including the risk that cover will not be offered or will only be available on less favourable terms
- suspicious claims activity where there are unusual or frequent claims, such as repeated small claims or claims for high-value items that the older person may not have the capacity to purchase or maintain, sometimes flags for potential fraud may be indicative of financial abuse
- sudden and unexpected changes to policies where the older person may remove or add policyholders, may have had frequent or unexplained changes to beneficiaries on their life insurance policy, or replace multiple beneficiaries in their life insurance policy with a single beneficiary
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