Financial institutions increasingly find themselves on the front lines of having to respond to cases of potential elder financial abuse. The challenge is to act quickly and proportionately when red flags arise, while honoring client privacy as well as contractual and fiduciary obligations.
This article outlines practical tips and best practices when such red flags arise, being mindful of appropriate limits. These recommendations are anchored in Canadian jurisprudence with respect to issues surrounding joint accounts and powers of attorney (“POAs”) and are also informed by widely cited supervisory guidance on elder-abuse controls, as further discussed below.
Defining Elder Financial Abuse: Forms and Indicators
Elder financial abuse is any improper conduct, carried out with or without the older adult's consent, that results in monetary loss for the senior, often occurring within a relationship where trust is expected (Government of Ontario, 2025). Common forms include misuse of joint accounts or POAs, forged cheques, coerced transfers, and scams - often facilitated by family members, friends, paid caregivers, landlords, or other individuals in a position of power or authority over the elderly person (Elder Abuse Prevention in Ontario). For financial institutions, some red flags to watch for include: unexplained or sudden withdrawals from accounts or ATMs, suspicious or forged signatures on cheques or documents, transfers or withdrawals of funds without the senior's prior permission, denial of access to or control over finances such as credit cards or cheques, and signs that the senior is no longer receiving bank statements (Elder Abuse Prevention in Ontario).
The Human Rights Commission of Ontario states that approximately 4% or 60,000 of the 1.5 million older persons living in Ontario experience elder abuse (Ontario Human Rights Commission, 2002 at p. 67). However, many elderly individuals are hesitant to report elder abuse due to the social stigma attached to it or because of concern regarding the consequences of reporting a loved one or a caregiver (Ontario Human Rights Commission, 2002 at p. 67). As a result, the true percentage is likely much higher.
Purpose and Legal Context
Financial institutions must navigate a three-part tension in the context of the services they provide:
i. the duty to follow client instructions under the relevant account agreement;
ii. the duty to follow the legal obligations surrounding privacy law; and,
iii. a growing expectation on financial institutions to detect, report, mitigate and sometimes even prevent financial exploitation of the elderly.
To that end, Canadian regulators and privacy commissioners emphasize that privacy law is not a barrier to reporting suspected exploitation to appropriate authorities, provided disclosure is made within recognized exceptions and is narrowly tailored (Frances Carr, 2022; Government of Ontario, 2024). Similarly, widely cited best-practice recommendations stress internal protocols and calibrated intervention tools to protect vulnerable clients while maintaining compliance with privacy legislation, such as the Personal Information Protection and Electronic Documents Act, SC 2000, c 5, s. 7(3)(d.3) (“PIPEDA”). Having said that, these additional obligations certainly add to the positive steps that a financial institution must take to balance the legal requirements surrounding privacy and best practices that will maximize the detection, reporting, mitigation and prevention of financial abuse of elderly Canadians.
In the Canadian legal landscape, three streams of case law are particularly helpful in navigating best practices when it comes to appropriate responses to suspected cases of elder financial abuse, having regard to the above-noted challenges:
i. First, the Supreme Court of Canada’s jurisprudence on joint accounts and gratuitous transfers, including the leading decision in Pecore v Pecore, 2007 SCC 17. This decision identified a common red-flag scenario that often arises where an adult child is added to their elderly parent’s account, which has thereafter resulted in courts closely scrutinizing intent, and the potential for undue influence in such a scenario (certainly where exploitation is suspected).
Specifically, Pecore holds that where a parent gratuitously adds an adult child as a joint owner of an asset, including but not limited to joint bank or investment accounts, there is a rebuttable presumption that the asset is held on a resulting trust for the parent or the parent’s estate upon their death, rather than passing to their child as a gift (Pecore, para 41). The presumption is rebuttable: the adult child must prove, on a balance of probabilities, that the parent intended to make a gift of the beneficial interest at the time of the transfer (meaning that they intended the child to take the asset by right of survivorship on the parent’s death) (Pecore, para 25).
ii. Secondly, as affirmed in McNamee v McNamee, 2011 ONCA 533, where the allegation is that a gratuitous transfer was completed during one’s lifetime, the donee must also establish the elements of a gift: an intention to make an immediate gift, delivery, and acceptance, rather than merely a transfer made for convenience purposes (McNamee, para 24).
iii. Finally, as established in Public Guardian and Trustee v Hara, 2025 ONSC 145, Ontario courts will intervene where POAs are misused, ordering restitution and protective relief when attorneys breach their fiduciary obligations. Financial institutions are at the heart of this issue, as reviewing a POA and confirming the scope of its authority may reduce the risk of financial exploitation of an elderly client and may, at times, even prevent that kind of case from getting to court.
Together, these authorities reinforce that financial institutions should carefully verify authority and client intention, particularly when transactions materially depart from historical patterns or where there is suspicion of undue influence.
Specific Ways that Financial Institutions Can Help to Prevent Elder Financial Abuse
Financial institutions can significantly reduce harm by documenting a client’s intentions with respect to joint accounts, carefully considering if there are any red flags pointing to undue influence or a lack of capacity and reviewing POAs, in detail. The following measures are consistent with recognized best practices and with the constraints of privacy law, discussed above (PIPEDA, ss. 7(3)-7(5)).
Joint Accounts and Gifts
While joint accounts can function as a vehicle for gratuitous transfers, elderly parents often add an adult child to their account for convenience purposes as they age, without the intention that the child will retain beneficial interest in the funds after their death (Pecore, paras 36 & 64). As noted above, where an adult child receives a gratuitous transfer from their parent, whether through a joint account or an outright inter vivos gift, a presumption of a resulting trust exists, meaning that the money results back to the estate of the elderly person on their death (Pecore, para 41). However, such a presumption can be rebutted by evidence that proves the testator intended for the funds to be a gratuitous transfer to their child (Pecore, para 24).
In conversations with elderly clients seeking to add someone to their account or send a large amount of money to another person, staff should ask clear questions designed to document intention, comprehension, and purpose. Further, clear contemporaneous notes should be made documenting these discussions if there is ultimately a dispute as to what the client intended to do.
Review of Legal Documents
Secondly, financial institutions should request and review legal instruments, where applicable. When a representative purports to act on behalf of a client, staff should examine the relevant document authorizing that person to act (e.g. a POA or a Court Order). This ensures that the authority and the scope of powers granted to the attorney/guardian, and the validity of the document is confirmed and that it was not revoked or superseded by a subsequent instrument. In particular, financial institutions should review the following clauses within the relevant document:
- The specific authority granted (i.e.: powers to withdraw funds, sign cheques, manage accounts) (Widdifield on Executors and Trustees (6th ed) § 3:28 Parent and Child; Michael Ng, Fiduciary Duties: Obligations of Loyalty and Faithfulness § 5:6.30 Fiduciary Duties Pursuant to a Power of Attorney (POA)).
- Any limitations or conditions (such as restrictions on compensation, requirements to act solely for the benefit of the grantor, or clauses restricting conversion of accounts to joint ownership) (Maragaret E. Rintoul, Widdifield on Executors and Trustees (6th ed), § 11:3. Compensation Agreements).
- Revocation or replacement clauses, which may indicate whether earlier instruments were revoked, modified, or whether multiple parties are to act jointly or severally (Berkelhammer v Berkelhammer Estate, 2012 ONSC 6242 at para 23).
- Clauses requiring explicit instructions or authorizations for certain actions, as financial institutions may refuse transactions that fall outside the scope, or if they are not satisfied that the act is for the grantor’s benefit (§ 3:28 Parent and Child; § 5:6.30 Fiduciary Duties Pursuant to a Power of Attorney (POA)).
The case of Picone v Mossetti, 2023 ONSC 1038 highlights that financial institutions may reserve the right to refuse withdrawals by an attorney under a POA if the institution is not satisfied that the transaction is for the benefit of the account holder (para 19). This is intended to protect vulnerable clients from abuse by their attorneys.
By the same token, the Supreme Court of Canada in Gold v Rosenberg, 1997 CanLII 333 (SCC) held that a financial institution is required to act reasonably under the circumstances and is not obliged to undertake an impractically extensive duty of inquiry, but may refuse to process transactions if it is not satisfied with the authority or intent behind them, particularly where there are concerns about the protection of the client (paras 63-67).
Conclusion: Limitations on Financial Institutions’ Authority and Responsibilities
Proportionate intervention has limits. Absent a lawful basis, financial institutions should not override client instructions or refuse ordinary transactions solely because they seem unwise. Without evidence of incapacity, coercion, fraud, court order or statutory restriction, the baseline contractual duty to follow clear instructions remains paramount.
Crucially, financial institutions should not diagnose capacity – that is not within their scope of authority. Indicators of diminished capacity – memory lapses, confusion about routine transactions and the like – justify internal escalation and can, at times, support referrals for a formal assessment, but findings in respect of capacity are ultimately for the Court to make. A financial institution should not summarily block a transaction without substantiated concerns regarding scope, misuse, or emergent protective proceedings. The appropriate response is to verify the instrument, probe purpose, document observations, and, if warranted, escalate to protective authorities.
With respect to privacy, as discussed above, financial institutions must comply with federal privacy legislation such as PIPEDA (specifically ss. 7(3)-7(5)) which restricts the collection, use, and disclosure of personal information without the individual's consent. Absent consent, financial institutions cannot breach these privacy rules except where required or permitted by law (i.e. in response to a court order, warrant, or other lawful authority). Disclosure of client information without proper legal authorization, such as a clear consent or statutory exception, would violate PIPEDA's requirements. However, where there are reasonable grounds to believe that an elderly client has been or may be a victim of financial abuse, financial institutions may lawfully report this information to the Office of the Public Guardian and Trustee (“OPGT”) under one of the recognized PIPEDA exceptions (s. 7(3)(d.3)(i)).
Reporting Pathways in Ontario:
Where an older adult appears incapable and there is a belief that they may be a victim of financial abuse, financial institutions should notify the OPGT Investigations Unit, which protects the legal, personal, and financial interests of mentally incapable adults and conducts guardianship investigations where a person may be incapable and at serious risk of harm (Government of Ontario, 2026). The investigations Unit can be contacted by phone (1-800-891-0504) or email (OPGT.Investigations@ontario.ca).
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