Financial Planners reacting to a report exposing family wealth abuse say that too little is being done to protect financially vulnerable people.

Financial Planners have told Financial Planning Today that they have seen clients fall victim to theft and fraud within the family with family members using funds how they see fit.

Martin Bamford, Chartered Financial Planner at Informed Choice, said that during his time as a Financial Planner he has seen several examples of poor financial behaviour within family groups and that it is the role of the Financial Planner to make sure the needs of a vulnerable family member are placed before the consideration of inheritance.

He said: “I've seen several examples of irrational financial behaviour within family groups, including shouting matches between siblings as they attempt to carve up the wealth of parents. The role of the Financial Planner should always be to place the emphasis on securing the needs of the elderly relative first, with inheritance a consideration coming later.

“The most blatant example I saw involved an adult son bleeding his elderly mother dry. Her other adult child asked me to meet with the mother, only for the son to closely monitor the meeting and take offence when I suggested that, rather than living in abject squalor, she should spend some of her considerable wealth on home improvements and a better quality of life.

"When the son prevented me from seeing the mother again, I reported my concerns to the other sibling who spoke to the local authority to make them aware of the financial abuse taking place.”

Tracey Evans, Chartered Financial Planner at Progeny, said she has seen a lack of discussion around money leaving wealthy people vulnerable to theft and fraud within their family when they have reduced capacity.

She said: “A big part of the problem is that money is often the last taboo within families and people therefore avoid openly discussing financial issues, especially in relation to what they want to happen when they have reduced capacity. This makes it much easier for people to fall victim to theft and fraud within their family, as without express wishes being defined, some family members can see this as a right to use these funds however they see fit. I have certainly witnessed this in my career.”

The report from the All Party Parliamentary Group (APPG) on Insurance and Financial Services and the Financial Vulnerability Taskforce industry group (FVT) said Financial Planners were seeing an increasing occurrence of financial pressure by family members being exerted on clients with accumulated wealth.

The bodies want more research into an area of concern where little data is available.

Ms Evans welcomed the report and said it recognised how life transitions can make many clients unexpectedly vulnerable.

She said: “In terms of vulnerability itself, the report recognises the important distinction of vulnerable circumstances, which are often triggered by life transitions such as bereavement, divorce and even the menopause for women and ties into the FCA’s updated guidance on supporting vulnerable customers.

“Not enough is currently being done to protect the financially vulnerable in our society. It’s possible for vulnerable people to fall prey to a wide spectrum of financial abuse and I welcome the focus that the Financial Vulnerability Taskforce aims to bring to this issue.”

Mr Bamford also welcomed the report and said it is important to address this form of financial abuse which is hard to detect.

He said: “This form of financial abuse is, sadly, widespread and often difficult to identify. The complexity of family relationships can make it almost impossible to detect, as the victims of family fraud are unwilling to take the action required to stop theft. Victims may oblige demands for cash due to a false sense of obligation or simply to avoid feuds with their nearest and dearest.”

The FVT, headed by ex-PFS CEO Keith Richards, was launched earlier this year and is now an independent Community Interest Company (CIC) with over 1,000 regulated firms who have adopted its charter.