A damning report has identified a range of practices at the Public Trustee that “fall short” of its fiduciary and legal duties.
The findings have prompted the Queensland Government to appoint a board to provide the body with oversight and direction
- A review of the Public Trustee’s fees and charges has been undertaken
- It found a range of policies and practices that fell short of legal and community expectations
- The state government has accepted “on principle” the majority of the review’s recommendations
The Public Trustee is appointed to protect people’s financial interests when their decision-making capacity is impaired.
It provides financial management services to more than 10,000 people each year — including more than 9,300 people under an administration appointment by the Queensland Civil and Administrative Tribunal.
Last month, the chief executive of a leading aged care support agency said it was charging asset-rich people such high fees that their resources were drained within a few years.
Position of trust
The Public Advocate, Mary Burgess, began a review in response to concerns raised about the negative impact of the Public Trustee’s fees and charges.
“People under the financial administration of the Public Trustee are some of the most vulnerable members of our community,” she said.
“Many of these people experience a range of vulnerabilities arising from disability, injury or illness.
“From that point, the Public Trustee is in a position of trust, controlling the person’s money and property and having significant power over their lives.”
The report found the Public Trustee had been struggling over many years to maintain its financial sustainability.
“Any breach of a person’s rights or a fiduciary’s obligations is ‘one breach too many’,” Ms Burgess reported.
“The Public Trustee cannot ‘rob Peter to pay Paul’ and fulfill its fiduciary duties to those clients who are paying high fees and charges, while others do not.”
A range of Public Trustee policies and practices were identified as falling short of both its legal duties and community expectations.
- The level and complexity of fees and charges, including charging multiple fees to manage the same funds
- A lack of transparency about fees, charges and investment practices
- A lack of clarity about what services administration clients receive for their fees
- The Public Trustee earning revenue from clients’ funds
- The practice of obtaining and charging for routine, and potentially unnecessary, independent financial advice that invariably recommends investing client funds in accordance with the Public Trustee’s prescribed investment approach
- The way the Public Trustee uses the Official Solicitor and charges legal fees to clients
One case study in the report, referred to as “Ella”, was effectively paying twice for management of her superannuation.
She was placed under administration with the Public Trustee after a health event, and was charged a fee to “manage” her superannuation — also being managed by QSuper, for which she was also paying fees.
Her supporters initiated legal action against the Public Trustee and over the ensuing 27 months, Ella was charged more than $23,000 in administration fees and charges on $570,000 of superannuation.
The report found more than half of the Public Trustee’s administration clients paid the two highest levels of a financial administration fee — based on where a client lived, how their income was paid and the level of support and personal contact they received from the Public Trustee.
There were 898 people liable to pay an annual fee of $8,966, the highest level, and 4,504 liable to pay $6,403, the second highest level.
Ms Burgess said the highest level was close to 37 per cent of a single person’s Disability Support Pension (DSP).
“This is a very large expense for a person living on the DSP and would significantly affect their ability to pay their accommodation and living expenses without eroding their savings or assets,” she said.
“If the client was paying this amount in rent, they would be considered to be in rental stress.”
Some unable to maintain their homes
The main source of income for many Public Trustee administration clients is the DSP, aged pension, or a payment from a superannuation fund.
The Public Trustee has a rebate scheme to limit annual fees, but the report found a significant number of administration clients of moderate means and income did not benefit from it.
Ms Burgess said the Public Trustee had been aware for several years that clients with a certain combination of assets and income — particularly those who owned their own home — did not benefit enough from the fee rebate scheme to maintain their modest lifestyle.
“In some instances, the level of the fees and charges can result in clients being unable to maintain their home which, for most people, provides a place of safety, security and a level of independence,” Ms Burgess said.
She said her office continued to be contacted by people experiencing a “rapid depletion” of their modest assets due to the Public Trustee’s fees and charges.
Majority of recommendations accepted
The report did note a “comprehensive reform agenda” provided by the Public Trustee in response.
That includes adopting a “customers first” agenda, increasing transparency, and undertaking a review of fees and charges to ensure they were fair, reasonable and sustainable.
The State Government said it had accepted the majority of Ms Burgess’s 32 recommendations “on principle”.
Attorney-General Shannon Fentiman said protecting vulnerable people was a priority.
“The board will provide increased transparency and accountability and importantly, enhance public confidence in this service,” she said.
“An internal review into the Public Trustee’s fees and charges is already underway, including significant changes to its operational systems to ensure better service delivery to the community.”
Ms Burgess’s review urges the government to act swiftly to ensure the Public Trustee “immediately ceases all practices that constitute breaches of fiduciary duty”.
She also said some of the issues would require carefully considered legislative reform.
The Public Trustee is a fully self-funding agency and does not receive funding from the Queensland Government.