Herman was elderly, and Herman’s brother Kurt, complained to the bank that Herman lacked the mental capacity to arrange the transfers via telephone banking or at a branch (unless prompted by someone with him). Nor, he said, did Herman have the mental capacity to use phone and internet banking. Kurt said that when Herman went to a branch, Alec would stand “a few feet behind Herman”, and this behaviour should have raised staff members’ suspicions. He said Herman was immobile and looked “bewildered”, and staff should have recognised him as a vulnerable elderly customer. The fact that the transfers were so large, that they were occurring daily (in fact, at the daily transaction limit), and that Herman’s transaction account was being repeatedly drained of all funds should have sounded warning bells. Another red flag, said Kurt, was the fact that Herman asked for – and was issued –11 debit cards over a three-year period.

Our investigation

Police had charged Alec with fraud by the time we began our investigation. Our job was to determine whether the bank was on notice of a real possibility that Herman was being financially abused, and if so, when. The bank said Herman breached its account terms and conditions by telling Alec his PIN. However, we found documents showing that in May 2023 the bank froze Herman’s transaction account, after unsuccessful contact regarding a mounting credit card debt, prompting staff to review his transactional account history. The following month, the bank unfroze the account after Herman went into a branch to discuss the frozen bank accounts, even though he gave unsatisfactory responses about the ATM withdrawals. The bank then accepted it shouldn’t have unfrozen the account, and that it missed an opportunity to question Herman in more detail and uncover whether he was truly authorising the ATM withdrawals or was authorising them under pressure. The bank offered $200,000, an offer rejected by Kurt (who now had power of attorney for Herman).

In 2022, Herman had gone into a branch and requested seven replacement debit cards within a space of five months. One had been active for only four days before Herman asked for another replacement. We asked the bank for more information about these requests, but it had no record of why Herman was requesting replacement cards so frequently, nor did staff ask him for an explanation. We considered the bank should have flagged Herman as a potentially vulnerable customer in July 2022, when the frequency of his requests for replacement cards increased, and that it should have questioned him during a branch visit in October 2022 when he made seemingly confused transfers and withdrew a large amount of cash. Such behaviour, in our view, should have prompted staff to make enquiries. We facilitated an increased offer from the bank of $290,000.

Outcome

Kurt accepted the bank’s offer of $290,000.