KEY POINTS:
In a rapidly changing financial world, older people are becoming increasingly vulnerable to financial abuse.
A reader, let's call him Brian, contacted me after his father, a man in the advanced stages of dementia, had answered a call from a finance company.
"One of the company's telephone agents had rung my father," Brian said, "and sent him out an information pack with a promise that one of their agents would call him and discuss investing with them.
"My father can barely string a sentence together [and] he recognises few people. I would be staggered if he could consciously request an information pack and the person on the other end of the phone could not realise he was not competent to enter such an investment."
That was just one in a long line of salespeople who'd tried to take advantage of the dementia sufferer. At the beginning of this month, Brian walked in to find his father discussing a home ventilation system with a salesman. Brian took the phone from his father and intervened.
"I guarantee you that 'Richard' (the salesman) is ringing someone else right now and trying to sell them something they just don't understand on the phone."
Brian's father has in the past also signed up for a house alarm system when he already had one, and a real estate agent gave him a quote to sell his house.
"I suppose the harder question is how do you protect [older people] from this. I picked up both the recent incidents by pure luck and that is what scares me - not just for my dad but also all the other elderly people out there who grew up in a much more trusting environment than I did."
Fraud and other financial abuse of older people is a growing trend, says Age Concern. The effects can be devastating because the elderly are often not able to recoup the losses.
One problem, says Lucille Ogston, national director of Alzheimers New Zealand, is that much of the financial abuse of older people isn't actually illegal.
Jayne McKendry - Age Concern's professional adviser, elder abuse and neglect prevention - adds that there is a balance to be struck.
"Yes, some older people can be taken advantage of but we have to remember that older people still have the right to make their own decisions about their money and possessions," she says.
"We argue that any adult can make decisions that another adult would consider imprudent. Older people have the right to make those kinds of decisions as would any other person."
Abusers are most likely to be members of the older person's family - and especially a son or daughter. In an analysis of 231 cases of financial abuse, Age Concern found that sons or daughters comprised 37 per cent of abusers and husbands, wives or partners 16 per cent.
Typical financial abuse cases can involve:
* Not allowing an older person to buy what they need.
* Coercion to provide loans, gifts or to act as a guarantor.
* Pressure to use assets or to change wills or financial arrangements.
* Misuse of power of attorney for financial gain.
* Stripping or transferring of assets.
* Forging or forcing an older person's signature.
* Abusing joint signatory authorities on a blank form.
* Misusing Eftpos cards and credit cards.
* Cashing an older person's cheque without permission.
* Arranging for a will, contract or power of attorney to be signed, or beneficiaries to a will to be changed by using deception, coercion or undue influence.
* Using a power of attorney not in the interests of the older person.
* Getting older people to be a guarantor without sufficient knowledge to make an informed decision.
* Taking advantage of a person's diminished mental state to sell them inappropriate or overpriced goods and services.
I have heard of cases of financial salespeople contacting bereaved husbands or wives after a death notice appears and trying to convince them to invest in whatever they're selling.
In the case of widows in particular, many may have left financial matters to their husbands and become easy prey for fast-talking salespeople.
For evidence that not all financial salespeople have clients' interests at heart, just look at the elderly people who had their life savings invested in finance companies that went to the wall this year.
Many would have been encouraged to invest by financial advisers and planners who received juicy commissions out of their investments, but no responsibility when they failed.
The thorny issue is how to protect older people from financial abuse. One answer can be the signing of an enduring power of attorney, which is a formal document giving someone the power to act for you if you become too ill or incapacitated to make decisions yourself.
It's a good idea to sign one of these while still of sound mind, says Ogston, although many older people struggle over who to choose or trust.
Under the Protection of Personal and Property Rights Amendment Act 2007, which comes into effect on September 26, 2008, the law has tightened to help prevent vulnerable people being taken advantage of.
Attorneys will have to obtain a medical certificate stating that donors lack the mental capacity to make decisions for themselves.
Families aren't always kind and don't necessarily have the older person's interests at heart.
But if they do, it's a good idea to have a family discussion before the person in question becomes vulnerable, says Ogston.
"I would start a conversation pointing out that life is different to 50 years ago and there are charlatans out there who are very slick, but there are some simple procedures to put in place."
Other suggestions she makes include:
* Ensuring more than one person has power of attorney.
* All family members need to be involved and given information about what is happening.
* Seek professional advice from a lawyer or accountant as added security.
Age Concern recommends that any older person who feels they are being taken advantage of should tell someone.
Tracey Berry, head of wealth management at Westpac, says that it's worth getting to know your local branch's staff - they do at times pick up irregularities in people's accounts. The banks also all have "exception reporting systems" that are designed to pick up sudden changes in people's banking patterns, such as large sums of money being siphoned off.
Ogston adds that it's a good idea for older people to only have a limited amount of money kept in an account tied to their Eftpos card - perhaps with a weekly or monthly amount transferred from another account. This would help prevent large amounts of money disappearing.
Berry recommends older people who have appointed an attorney should have their bank statements mailed to a third party, such as their lawyer or accountant - if they have one.
The new act of Parliament will also require that records be sent to a third party.
Age Concern has produced two pamphlets, "Financial Abuse of Older Adults", for family and carers; and "It's YOUR Money", aimed at older people, which are available free from its website (www.ageconcern.org.nz).
The organisation also has a fact sheet about how to begin difficult discussions with older people entitled "Facing Change: Advice For Families Talking Together About Changing Needs".
