QLD Public Advocate Review exposes Public Trustee’s failings and conflicts of interest

For many years there has been a constant outcry of complaints from families who have been adversely affected by the actions of the QLD Public Trust Office. A recent review by The Public Advocate in Queensland has shined the spotlight on just how poor the Public Trustee’s conduct is, and how they are failing to do what is in the best interests of people who cannot look after their own affairs. The report highlights and confirms the Public Trustee has taken advantage of the vulnerable people they are supposed to be looking after and protecting, explains Attwood Marshall Lawyers Legal Practice Director, Jeff Garrett.

Introduction

The Queensland Public Trustee has been in the spotlight recently with more stories about their misconduct and fee gouging tactics coming to light. After years of this behaviour and a constant outcry from the community, The Public Advocate carried out a review of the operations of the Public Trustee and put forward a report in January, 2021, which exposed just how much the actions and operations of these statutory bodies are impacting the community.

The very comprehensive 343-page report was prepared by Mary Burgess, who is the government appointed Public Advocate and an experienced lawyer in her own right. The Public Advocate is an independent statutory officer who protects and promotes the rights of Queensland adults with impaired decision-making capacity through systems advocacy. The Public Advocate works on behalf of adults with impaired decision-making capacity to:

• promote and protect their rights, including protecting them from neglect, exploitation and abuse
• encourage the development of programs to help them reach the greatest degree of autonomy
• promote, monitor and review the provision of services and facilities for them.

Families of people under the care of the Public Trustee have a long history of problems in dealing with the PTO and find it very frustrating that their only recourse is to take expensive Court action, only to be met with opposition from the Official Solicitor for the Public Trustee, who uses the funds of the protected person to defend the PTO!

There are many cases of people being admitted to hospital after a fall, or have the onset of dementia, and health workers making applications to QCAT to have the Public Trustee appointed as their financial manager, resulting in them being placed into a care facility. Their family homes are then sold, along with all of their belongings, and the funds are invested in the PTO ‘Growth Fund’. Regular monthly fees based on a number of methods of calculation are then debited from the protected person’s funds. This process of the QLD government health workers applying to the QCAT (a state government tribunal) and referring the management of someone’s affairs to the Public Trust Office (another state government body) has an obvious conflict of interest and seems to be a well oiled process designed to generate income by way of fees. This process was acknowledged in the report and noted the funds held by the PTO had increased from $81.9M in 2000-01 to $178M last financial year.

The report also noted the conflict position of the inhouse Official Solicitor to the PTO and how they are often engaged to defend the position of the Public Trustee rather than the protected person, as well as charging for this work. This includes suing family members for loans and running up large legal bills for very little return.

What is the role of the Public Trust Office?

Since 1916, the Public Trustee have been providing services as the trustee and administrator for some of Australia’s most vulnerable citizens. Where a person is found to have ‘impaired capacity’, in Queensland, they can be placed under administration by Queensland Civil and Administrative Tribunal (QCAT). When the Public Trustee is appointed as someone’s administrator, they can then step in and make all the financial decisions for that person. An appointment as administrator gives the Public Trustee significant power and control over that person’s life. The Public Trustee steps in where people do not have an Enduring Power of Attorney in place or if that person does not have anyone else in their life to step into that role and make decisions on their behalf.

Some of the other services the Public Trustee offer includes:

• Will drafting services
• Executor services
• Enduring Powers of Attorney
• Deceased estate administration
• Financial administration
• Auction and sale of properties
• Hold unclaimed money for people in circumstances where an organization has lost touch with the owner of the funds
• Manage investments and trusts for beneficiaries who are minors or have a disability
• Handling prisoner’s affairs when they are incarcerated
• Other services

Allegations against the Public Trustee

Both the QLD Public Trustee and NSW Trustee and Guardian have their skeletons in the closet. Last year we called for an inquiry into NSW Trustee and Guardian after the tragic passing of Kingscliff pensioner Steven Colley. One year on, it seems nothing has changed.

There continues to be explosive claims made by clients of the Public Trustee who have had their lives turned upside down from the mismanagement of their financial affairs or after suffered significant financial loss after being charged exorbitant fees.

Allegations against the Public Trustee include:

• Dysfunctional office culture
• Corrupt conduct
• Unfair commissions and fee gouging
• Financial mismanagement and investing in the PTO Growth Fund
• Unqualified personnel giving legal advice
• Poor management or delays in administering deceased estates
• Lack of transparency about the fees and the policies that guide how and when they are charged
• Enticing people with a “free Will” offer, only to then upsell their executor services and charge excessively for these services after the person dies.

The Public Advocate’s Review: “Preserving the financial futures of vulnerable Queenslanders”

In January this year, The Honourable Shannon Fentiman MP, Attorney-General and Minister for Justice, Minister for Women and Minister for the Prevention of Domestic and Family Violence, presented a report called “Preserving the financial futures of vulnerable Queenslanders; A review of Public Trustee fees, charges and practices’. The report was very comprehensive and looked into all the areas and functions of the Queensland Public Trustee. Although this particular report was only reviewing the QLD Public Trust Offices, trust offices across other states and territories in Australia are set up and perform in a similar way, and this report will generally apply to most of them.

The Executive Summary was 42 pages, and 32 recommendations were made in relation to the operation. The government has announced that they will adopt most of the recommendations, including adopting a “customer first” agenda, increasing transparency, and undertaking a review of fees and charges to ensure they are fair, reasonable, and sustainable.

The catalyst for this report was an ongoing outcry from families, institutions, lawyers, doctors, and other people in the community who identified the shortfall in the Public Trustee’s legal duties and community expectations.

The main areas of concern were:

• Fees and charges in relation to administering deceased estates
• The conflict of interest and fees charged when appointed as financial manager. The Public Trust Office were proven to be using the funds of the people they were meant to be looking after to invest in their own products which enriches them. This goes against their fiduciary duties, which is to always act in the best interests of the person whom you are the trustee for. As a trustee, you must not do anything that creates a conflict and benefits you as the trustee.
• The failures and poor conduct of Public Trust Office staff to adequately look after those they were supposed to. In many cases it has been reported that public trust office staff let their client’s houses go to wreck and ruin, they did not provide money to their clients when they needed essential items, and failed to communicate with the families of those in their care.
• The role of the Official Solicitor and the fees charged, its conflicted role to act for the protected person (and not the PTO), and the fact the lawyers are not subject to the scrutiny of the Legal Services Commission.

Although the review of the Public Trustee initially commenced as a review of the fees and charges charged, over time there were more people who were under administration, and their supporters, that came forward and approached the Public Advocate. On closer examination, the complaints and concerns of these people raised some serious issues about the level and complexity of the Public Trustee’s system and lack of transparency about earning revenue from their client’s funds.

This report has forced the government to acknowledge the Public Trust Offices shortcomings and enforce change. Although the Public Trustee announced a review of its fees and charges earlier this year, nothing has happened on this front, so the fee gouging continues.

Below is a complete list of the recommendations made in the report:

1. Undertake a full fees and charges review
2. Improve the transparency of fees and charges
3. Consider the effect of fees when appointing the Public Trustee as administrator
4. Reconsider the practice of routinely obtaining external financial advice
5. Discontinue general fees for incidental outlays
6. Seek a Goods and Services Tax exemption
7. Review Community Services Obligations (i.e. free wills etc.)
8. Discontinue client subsidization of Community Service Obligations
9. Limit the level of community service obligations
10. Review fee rebate and financial hardship provisions to ensure client assets are not depleted by fees and charges
11. Do not profit from administration clients unless expressly permitted by law
12. Improve transparency of Public Trustee revenue sources
13. Clearly report the fees and costs of managing Public Trustee investments
14. Stop requiring administration clients to pay double charges on their funds
15. Limit the amount of Public Trustee surpluses and reserves
16. Review investment practices and discontinue activities that do not directly benefit the client
17. Review and update the Prudent Person Rule Manual
18. Publish the Prudent Personal Rule Manual
19. Review position on conflict transactions
20. Review the practice of only investing in Public Trustee investment products
21. Adopt a new client investment strategy
22. Reconsider routinely obtaining external financial advice for certain types of assets
23. Obtain advice about refunding financial advice fees
24. Review the role and operations of the Official Solicitor
25. Develop a policy to support administration clients to make complaints about the Public Trustee
26. Amend legislation so Public Trustee solicitors are overseen by the Legal Services Commission
27. Review Official Solicitor policies and practices
28. Considerations for the review of Public Trustee fees and charges
29. Amend legislation to clarify how the Public Trustee can invest client funds
30. Consider additional oversight mechanisms
31. Update the Public Trustee Act to better acknowledge rights and interests of people with impaired decision-making capacity
32. Amend legislation to ensure the Public Trustee is an appointment of last resort and the appointment is periodically reviewed

Attwood Marshall Lawyers can help if you are involved in a dispute with the Public Trustee

We have seen a significant increase in enquiries from those stung by both the QLD Public Trustee and NSW Trustee and Guardian.

We continue to see the aftermath of unqualified personnel giving legal advice and charging exorbitant fees stripping beneficiaries of their entitlements and delaying the administration of estates.

It is important for everyone to know that if you are dealing with the Public Trustee, you do not have to accept everything they tell you. It is always best to obtain independent legal advice and help to ensure your best interests are protected.

Most importantly, it is vital that you ensure you have an Enduring Power of Attorney in place to avoid getting caught out if the unexpected happens and you lose capacity and cannot make decisions for yourself. Take caution when making important decisions about who you are appointing as your administrator to manage your legal and financial affairs in the event you cannot manage your own affairs.

Attwood Marshall Lawyers is a leading estate litigation law firm with extensive experience in Public Trustee matters. We can help you if you are experiencing problems with Public Trustees, including assisting with:

• Matters involving the mismanagement of affairs under financial management orders
• Negotiating exorbitant fees
• Matters involving the mismanagement of deceased estates where the Public Trustee is the Executor
• Applications to the Court to seek the Court to appoint alternative trustees, replacing the Public Trustee.

For all Public Trustee related enquiries, please contact Estate Litigation Department Manager, Amanda Heather, on direct line 07 5506 8245, email aheather@attwoodmarshall.com.au or free call 1800 621 071.

Read more:

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