A recent report from STEP, the global professional body for inheritance advisors, has brought to light the widespread issue of financial abuse among vulnerable individuals.
Titled “Loss of Mental Capacity: A Global Perspective,” the report reveals that 70% of UK practitioners, including solicitors and those involved in estate and wealth planning, have witnessed financial abuse or suspected cases of it.
This abuse often involves coercion in lasting power of attorney (LPA) arrangements, where vulnerable individuals are pressured to appoint someone as their representative. This representative, who could be a family member, friend, or fraudster, gains control over the vulnerable person’s financial decisions and property.
The report details that 38% of professionals surveyed in the UK observed an increase in financial abuse cases in the last two years. It also highlights that 66% agree that safeguarding around LPAs needs to be strengthened, and 81% expect a rise in demand for mental capacity advice over the next five years.
Emily Deane TEP, Head of Government Relations at STEP, remarked on the issue, said: “When people lose mental capacity, they are also at higher risk of financial abuse. Sadly, much of this abuse will go unnoticed and unreported.
“While it is heartening that so many practitioners (83%) reported they are confident that they can recognise signs of financial abuse of a vulnerable person, the public need to be better informed about these risks.
“We urge people to seek expert legal advice and appoint only the most trusted family members, friends and/or legal professionals to act as their representative should they lose mental capacity in the future.
“Planning ahead means that people can help ensure their wishes are followed and will help reduce the risk of financial abuse.”
The report also discusses the growing problem of mental incapacity in an ageing population, with dementia cases projected to triple by 2050. Currently, the UK has over 900,000 people living with dementia, and this number is expected to rise to 1.6 million by 2040.
Jaina Engineer, knowledge services manager at Alzheimer’s Society, added: “Currently, 900,000 people live with dementia in the UK. With this number set to rise, this report highlights the importance of planning ahead for a time when people may no longer be able to make decisions for themselves.
“This report also shows the importance of a lasting power of attorney (LPA). The role of attorney carries huge responsibility, and sadly there is scope for abuse. It is vital that the attorney is someone the person trusts.
“It’s encouraging to know so many professionals are able to spot the signs of financial abuse, but we welcome the report’s key reflection that more must be done to alert professionals and members of the public to signs of financial abuse; and the need for robust safeguarding frameworks.
“We also welcome STEP’s aspiration to improve cross-border recognition of LPAs, which will benefit an increasing number of families whose assets are spread across different countries.
“At Alzheimer’s Society, we strongly encourage everyone to plan for the future as soon as they’re able to after a dementia diagnosis, to ensure that their wishes are respected and they’re able to spend quality time with loved ones.”
