Financial Management Orders

What is a Financial Management Order (FMO)?
A financial management order is an order issued by either the New South Wales Civil and Administration Tribunal (NCAT) or the Supreme Court where a person has lost or diminished capacity, impairing their ability manage their own financial affairs. Such an order is sometimes be needed where a person has suffered a stroke, developed dementia or Alzheimer’s disease, has a mental illness or even has a substance abuse problem.

The order is made under the Guardianship Act 1987 and has the effect of appointing another person or organisation in the place of the individual to make financial decisions on that person’s behalf. This means that the person or individual appointed can:
– operate a person’s bank account;
– buy and sell property;
– invest money;
– buy and sell shares;
– renew the registration on a person’s car;
– pay bills;
– manage superannuation investments;
– control Centrelink payments; and
– allows a person to instruct a solicitor in legal proceedings.

A financial manager can make decisions about any aspect of the person’s financial affairs unless the Tribunal specifies that a part of the person’s estate is excluded from management. A financial manager does not make personal or lifestyle decisions. In order to make these decisions a person needs to apply for a guardianship order.

When would you need to apply for a Financial Management Order?
A person should consider the following questions before making an application to NCAT:
– Does the person the application is about lack the capability to manage their financial affairs?
– Is there a need for another person to manage their affairs on their behalf?
– Are there any decisions that need to be made now that cannot be made by someone informally?

NCAT can only appoint a financial manager for a person who has a disability that affects their decision making if:
– The person has assets in NSW
– They are not capable of managing their own financial affairs
– There is a current need for someone to manage their financial affairs and
– It is in their best interest for an order to be made

One important point of difference between a Financial Management Order and the appointment under Power of Attorney is that there is ability for the person who appoints someone under a power of attorney to revoke an appointment. In addition, a power of attorney does not restrict the ability for the person who is making the appointment from managing their own financial affairs – whereas a financial management order often will remove the ability from making financial decisions on their own behalf.

It is usually recommended that a person obtains a Financial Management Order where there is a vulnerable person who is at risk of elder’s financial abuse by third parties. A common scenario where such an order is needed is where a person who has developed dementia or has cognitive difficulties is being unduly influenced into to gifting their property away to third parties (e.g. friends or relatives).

Who can I appoint?
You can suggest a financial manager, however NCAT is not bound to appoint this person. You should talk to the person before appointing them. According to NCAT, the person must be over 18 years old and suitable for the role because of their own experience managing money, financial history and lack of conflict between them and the person.

If there is no one who is suitable or willing to take the role, NCAT will appoint NSW Trustee and Guardian. It should be noted that the NSW Trustee and Guardian charge fees to act as financial manager and supervise private financial managers.

Who applies for a Financial Management Order?
An application for a financial management order is usually made to the Supreme Court or NCAT by someone with a genuine concern for the welfare of a person who is having serious difficulty managing their own affairs.

NCAT also needs information from other people who know the person which the application is for such as their doctor or case manager. They need to write to NCAT with information about:
– Why it is difficult for the person to manage your own finances or property.
– Why the person needs someone else to make decisions.

O’Brien Connors & Kennett remains operational and is still ready, willing and able to meet your legal needs. We are committed to ensuring the health and safety of all our clients and staff. The precautions recommended by the Australian government have been implemented and clients and staff are required to wear masks in face-to-face meetings. Please contact us if you require our services.

DISCLAIMER: The information contained in this article is general and is not intended to be advice on any matter. It is for information only and is not legal advice. In the event of a legal problem, you should seek legal advice.