What We Can Do To Prevent Elder Abuse
I recently wrote a blog expressing concerns about proposals placing an affirmative obligation on the part of credit unions to report suspected elder abuse. As pernicious as this problem is, the best way to attack it is to ensure that the law provides adequate protection for those who suspect foul play as opposed to putting more pressure on our front line staff to recognize and act on evidence of suspected abuse.
One solution, as highlighted in a recent discussion at the Association’s Legal and Compliance Conference, is to file a SAR. Judging by the statistics, this is becoming an increasingly common practice and provides maximum protection to the credit union reporting the suspected abuse. The problem is that an awful lot of damage can be done between the time a SAR is filed and if and when it is acted on. Fortunately, existing law provides another narrow, but important protection, at least in New York State.
Merrill Lynch Pierce Fenner & Smith, Inc. suspected that one of its account holders suffered from dementia. It even had a letter from her doctor stating that within a month of granting the power of attorney, she lacked the legal capacity to understand what she was doing when she created the document to help manage her affairs. Merrill Lynch refused to honor the delegation of agency power which was granted to an agent in December of 2010 and instead a proceeding was commenced under New York’s General Obligation Law under Section 5-1504(2) and 5-1510(2)(i) to compel acceptance. The use of the law in this situation puts the onus on a court to ultimately decide if the power of attorney should be recognized.
As a result, a credit union with doubts as to whether or not a power of attorney should be honored has the authority to commence a special proceeding. This isn’t as complicated as it sounds. Special proceedings are more analogous to arbitrations than they are a trial. The resolution of the Merrill Lynch case shows how difficult some of these decisions can be. The judge ruled that the account holder had the capacity to enter into the power of attorney. He noted that even when a member has dementia, depending on how advanced the condition is, a person may still have capacity to make binding power of attorney decisions.
Ultimately, these are difficult, fact sensitive decisions. Expanded use of quick legal proceedings, a willingness to file SARs when appropriate, and, as I argued previously, statutory language that maximizes protection for institutions that report suspected abuse provide a framework for clamping down on elder abuse.
Lottery Bill Sent To Governor
Legislation to permit credit unions to offer lottery savings accounts (S.5145/A.7341) has been sent to the Governor. The legislation, for which the Association advocated, will allow credit unions in New York to follow the lead of those in other states to encourage savings by tying raffle prizes to the opening of savings accounts. The Governor has ten days to act on the bill.