Even at 86, she isn’t afraid to take a risk – you don’t lose almost a half-million dollars by playing it safe. But where, her family wants to know, was her financial adviser as she pumped her life’s savings into volatile mining shares? And how can someone that old, having suffered a stroke and been diagnosed with frontal lobe dementia, be allowed to sign a form stating that she has an “excellent understanding” of the stock market?
By the time the complaint, which is still outstanding, reached Douglas Melville, Canada’s banking ombudsman, the woman’s portfolio was down an alarming $470,000.
For another elderly woman, family was part of the problem. After being diagnosed with cognitive impairment, she wisely turned over her financial affairs to her daughter. But she retained joint control of her account, which was all an unscrupulous relative needed to have her co-sign for a pair of hefty bank loans.
With dementia on the rise as the population ages, Canada’s financial and legal systems are beginning to realize how ill-equipped they are to deal with the growing number of people unable to administer their own affairs. Some are being taken advantage of, defrauded in a variety of ways, while others are being given bad advice, even by lawyers, financial advisers and family members with good intentions.
How serious is the problem? Nobody knows for sure – because nobody is keeping track.
The Ombudsman for Banking Services and Investments, the agency that investigates public concerns involving 600 financial institutions, has not been tracking how many of its cases involve dementia. But when Mr. Melville, appointed its head about a year ago, was asked to look into the situation, he quickly found several such cases filed last year alone.
And dicey investment is far from the only dementia-related problem facing the courts and business community. An ever bigger issue is a rising tide of family friction. As their parents live longer, many Baby Boomers find that divorce and a tendency to live beyond their means have left them short of cash. Eager for their inheritance, some are cutting corners to speed things up.
Whether it’s fraud or feud, says Toronto lawyer Jan Goddard, diminished mental capacity makes almost anyone a potential victim. “It would take a lot of influence to get any of us to do something we don’t want to do,” she explains, “but it doesn’t take much if we have dementia: All I have to do is lie to you.”
As a result, financial abuse is increasing, along with pressure to do something about it. Many financial institutions operate on the understanding that buyers must beware, says Laura Watts, national director of the Canadian Centre for Elder Law in Vancouver, but “I’m not sure that system will stand up.”
AWKWARD SUBJECT
Clearly it’s wrong to take advantage of someone, but the banks claim that dementia puts them in a sticky situation at the best of times.
They say the condition isn’t always readily apparent, and it’s awkward to question an elderly person’s mental faculties and second-guess a transaction. “If the client comes in to co-sign” a loan for someone else, Mr. Melville asks, “does the bank have the right to challenge that?” To do so on a regular basis could amount to age discrimination.
Even preventative measures aren’t always enough, he says. His office was alerted last year when a free-spending dementia sufferer was issued a credit card even though her family had flagged her credit profile to keep that from happening. Somehow she evaded the restriction by applying for a pre-approved card and spent $1,000 before anyone noticed. The credit-card company ended up eating half the cost.
