NSW Trustee and Guardian is delivering financial management and guardianship services in line with its legal authority

NSW Trustee and Guardian has broad powers and functions when acting as financial manager or guardian after appointment by a court or tribunal.

These include all the functions the person under a financial management or guardianship order has and can exercise, or would have and could exercise if under no incapacity, including: custody of the person to the exclusion of others (for guardianship orders), and the power to make decisions, take actions and give consents.

NSW Trustee and Guardian is delivering its direct financial management and guardianship services in line with this broad legal authority.

High caseloads for frontline staff and inadequate IT systems have reduced the extent to which NSW Trustee and Guardian gives effect to the legislative principles

The legislation specifies principles that must be observed when financial management and guardianship powers are exercised, but the extent to which NSW Trustee and Guardian gives effect to the principles is hampered by high frontline staff caseloads and inadequate IT systems.

Under the enabling legislation, NSW Trustee and Guardian has a positive duty to observe certain principles when exercising functions with respect to guardianship and direct financial management clients. These principles include to: give paramount consideration to clients’ welfare and interests, restrict their freedom of decision and action as little as possible, take account of their views, preserve their family relationships and cultural and linguistic environments, encourage their self-reliance and protect them from neglect, abuse and exploitation.

The first principle, to give primary consideration to clients' welfare and interests (known as the 'best interests' principle) is emphasised in NSW Trustee and Guardian's policies, procedures and staff training. We observed staff practice aligned with this principle.

To consider the 'best interests' of the client and determine which of the other six principles should apply to individual decisions, financial management and guardianship staff must assess information about the client. For example, staff need information about the client's situation and context to know what 'freedom', 'self-reliance', 'normal' and 'preserving relationships' might look like for the client in practice. Information about the client's situation and context also assists staff in assessing the risk of a client experiencing neglect, abuse and exploitation.

The process of collecting and considering information about an individual client to consider the application of the legislative principles can take time that is not often available to frontline staff due to their high caseloads.

In 2021–22, NSW Trustee and Guardian reviewed the average time spent by frontline staff with clients or on client matters per week, based on ratios of staff numbers to caseloads over time. This modelling estimated that frontline staff were spending less time each week on average in 2020 compared to 2011. NSW Trustee and Guardian argued that without additional investment, this would drop to an average of 14 minutes per week per client for guardianship and 11 minutes per week per client for direct financial management in 2026.

In addition to high frontline staff caseloads, inadequate IT systems have made it difficult for frontline direct financial management and guardianship staff to record and readily obtain information about individual clients for whom they need to make informed decisions. Given that NSW Trustee and Guardian does not provide one-to-one frontline staff-to-client ratios for its direct financial management and guardianship services, all frontline staff require access to appropriate record systems that provide them with the client information they need to apply the legislative principles to their decisions.

But NSW Trustee and Guardian's current IT systems do not automatically flag or prompt frontline staff and their supervisors to check that client records are complete and accurate, and that decisions made by frontline staff are in line with relevant client information and the legislative principles.

A lack of data on referrals to NSW Police Force and other state and federal agencies also makes it difficult for NSW Trustee and Guardian and the audit to assess how effectively it observes the legislative principle to protect clients from neglect, abuse, and exploitation in its practice.

Private managers must also observe the same legislative principles, and NSW Trustee and Guardian has a statutory oversight role with respect to private managers. However, the agency does not provide guidance to private managers on how to apply the principles, and does not scrutinise whether the principles are observed by private managers in exercising their powers.

NSW Trustee and Guardian has planned and attempted a variety of initiatives to reorganise team responsibilities and lower frontline staff caseloads, and to address technology and systems issues, over the audit review period. With additional funding received in 2021–22, 120 new roles were recruited to mostly financial management and guardianship frontline functions, and new operating models for these services were developed for implementation from 2022. Related IT system upgrades will follow if a separate business case for additional capital funding is successful.

There is little evidence that NSW Trustee and Guardian considers and applies the legislative principles to encourage client self-reliance and restrict clients' freedom of decision and action as little as possible

Under section 71 of the NSW Trustee and Guardian Act 2009, financial managers have specific legislative discretion to authorise a client to manage part of their own estate as a means of encouraging their self-reliance and developing their decision-making capacity. However, this authority has not been exercised often: only 610 clients out of 12,556 direct financial management clients (five per cent) had section 71 authorities as at 30 June 2022.

As part of the new operating models being implemented from 2022, NSW Trustee and Guardian established a dedicated team to focus on growing the number of people given section 71 authorities. But it is a small team (of four people) for the large consumer base of direct financial management clients (at least 12,400 per annum).

NSW Trustee and Guardian is not legislatively authorised to provide, nor funded to resource, related services such as financial counselling or coaching to assist clients to develop their financial literacy and skills. NSW Trustee and Guardian reports that there are limited numbers of external service providers in the market to which it could refer clients, and that there are a large proportion of clients who will never be suitable for section 71 authorities because they have conditions which make it unlikely that they will regain relevant decision-making capacity over time.

NSW Trustee and Guardian does not provide direct financial management clients with the ability to independently access real-time information about their available funds, expenditure, and budget. This makes it difficult for clients to be self-reliant and independently track their spending and savings. It also restricts clients' ability to make day to day or immediate decisions allowed under the order, and to take actions based on real-time information about their finances. NSW Trustee and Guardian advises that self-service options on online platforms such as a client portal on Service NSW are being investigated.

The Public Guardian does not have legislative discretion to delegate decision-making authority to people under guardianship orders. However, the new operating model for guardianship services aims to measure the proportion of early discharge orders that the Public Guardian seeks at the NSW Civil and Administrative Tribunal (NCAT). The rationale for this measure is to discharge people from guardianship at the right moment, to empower them to continue making decisions for themselves. This has not been previously tracked. While guardians can advocate for decision-building supports for clients as part of their general client advocacy functions, they are limited by community resources available where the client resides, and their own significant workloads.

NSW Trustee and Guardian governance and practices for financial management and guardianship are not informed by clients' lived experiences and do not reflect the nature and diversity of its client base

Financial management and public guardian clients have, by definition, impaired decision-making capacity that may be influenced by a range of different conditions such as traumatic brain injury, dementia, intellectual disability, and mental illness.

However, NSW Trustee and Guardian does not analyse its client data based on different types of disability or conditions to assess staff understanding and competencies, target appropriate staff training and tailor its services to groups of clients with particular needs. It also does not have a consumer advisory entity to provide it with advice on financial management and guardianship services from the perspective of clients with lived experience. This is in contrast to other government agencies that have specific disability advisory committees in place, such as Transport for NSW.

There is also room to increase the alignment of NSW Trustee and Guardian’s governance and practices with the legislative principle in its enabling statutes that recognises the importance of cultural and linguistic environments of clients, and with provisions of the Disability Inclusion Act 2014.

The principles in the Disability Inclusion Act express key commitments of the NSW Government to recognise and respect the cultural and linguistic and other domains of diversity of people with disabilities. These provide that supports and services should be accessible and meet the needs of diverse groups of people with disability, and be informed by consultations or partnerships with their communities. This includes Aboriginal and Torres Strait Islander people, people from culturally and linguistically diverse (CALD) backgrounds and people who identify as lesbian, gay, bisexual, transgender, intersex, queer/questioning and other sexualities and genders (LGBTIQ+).

The data NSW Trustee and Guardian provided to us during the audit had significant gaps in the fields that capture the diverse status of its clients. For example, in 2022, for 2,568 guardianship and 281 direct financial management clients, files had blank ‘main language’ fields. Noting this constraint, the available data suggests the following diversity in 2022:

• The proportion of clients that speak a main language other than English:
  • under guardianship orders was 4.7%
  • under financial management orders was 3.4%
• The proportion of clients who are Aboriginal:
  • under guardianship orders was 9%
  • under financial management orders 7.1%
• This was at least double the proportion of the general population in NSW who are Aboriginal.
• NSW Trustee and Guardian do not know what proportion of its direct financial management and guardianship clients identify as LGBTIQ+. However, it advises that this information is collected for individual clients if it is relevant to the decisions and actions being made for them.

Despite the diversity in its client base, NSW Trustee and Guardian does not specifically seek feedback on its services from Aboriginal, CALD, LGBTIQ+ or other diverse clients or stakeholders to ensure that they are meeting their particular needs. It also does not have governance arrangements, specific staff training, consultation or staff arrangements to guide its engagement with these diverse client groups or their representatives.

This is a particular gap for Aboriginal clients and stakeholders since they are over-represented among NSW Trustee and Guardian's clients compared to the general population.

NSW Trustee and Guardian needs to improve the accessibility of the information it provides to direct financial management and guardianship clients

Most of NSW Trustee and Guardian's contact with direct financial management and guardianship clients is via phone calls or written material (letters and emails). Some written material is in an 'Easy Read' format using visuals and simple text, but most is not accessible for people with visual impairments, limited literacy and/or lacking English language skills. This restricts clients from being able to independently access information about decisions made on their behalf by NSW Trustee and Guardian.

People with lived experience and other external stakeholders we heard from through this audit have consistently advised that face-to-face meetings (held either virtually or in person) are more accessible than phone calls or written communication, because they enable body language to be read along with verbal messages. However, NSW Trustee and Guardian staff rarely engage with clients face-to-face either virtually using audio visual technology or in person through its shopfronts.

NSW Trustee and Guardian has only recently identified measures to track the performance of its financial management and guardianship services, and cannot demonstrate whether its performance has improved over time

In 2021–22 NSW Trustee and Guardian developed new divisional key performance indicators which aim to track the quality of services delivered to people under financial management and guardianship orders. It has also established a benefits realisation framework to monitor the expected benefits from the additional funding received in 2021–22. Some of these new performance indicators and benefits realisation indicators are currently being measured, but many will require changes to IT systems, as well as new client and stakeholder engagement processes, to collect additional data.

Prior to 2021–22, NSW Trustee and Guardian measured the performance of some of its financial management and guardianship operational processes. While these operational measures demonstrated whether it was fulfilling some of its legislative functions, they were predominantly activity measures and did not inform on the quality of decision-making undertaken for people under financial management and guardianship orders, or their experiences and outcomes.

NSW Trustee and Guardian needs to improve how it monitors and reviews decisions made by financial management and guardianship staff to ensure they are in line with policies, procedures, and the legislative principles. Beyond monthly reviews of one file per staff member, there is no process to consistently check the quality and accuracy of staff decisions and of staff reviews of their own files and client records. There is also no process to regularly monitor and review staff calls and e-mails to ensure good customer service practices are adhered to, and that policies and procedures are followed in line with the legislation.

NSW Trustee and Guardian monitors the financial performance of the common fund, in which some direct financial management client funds are invested, including through measuring against relevant financial market benchmarks. For other aspects of direct financial management, there is limited tracking to understand whether NSW Trustee and Guardian decisions and actions are financially sound and/or improving client outcomes. It does not routinely monitor low account balances to understand whether budgets are unrealistic or overly restrictive for clients.

Customer service principles are in place but implementation is not tracked, and financial management and public guardian clients are not asked to provide relevant feedback

The legislation and standards do not specify a benchmark for service quality. To provide consumers with information about what they can expect from NSW Trustee and Guardian’s services, organisation-wide ‘customer excellence principles’ were introduced in September 2018. However, NSW Trustee and Guardian does not ask financial management and/or guardianship clients or their stakeholders for feedback on these services considered against the customer excellence principles.

An annual survey is conducted of fee-paying clients across NSW Trustee and Guardian's services. Only a very small proportion of financial management clients are surveyed, and respondents are not stratified by their type of disability or reason for decision-making incapacity, cultural identity, accommodation type, location, or other characteristics. The survey is conducted over the phone in English, excluding financial management clients and stakeholders who are: non-verbal, do not speak English, do not have access to a phone and/or have low digital literacy. The firm conducting the surveys are not trained in engaging with people with disability.

This may mean there is under-representation from some cohorts of clients who cannot engage with the survey in the way it is offered.

The only other source of client feedback on financial management and guardianship services is therefore complaints. NSW Trustee and Guardian has consistently tracked the number and themes of formal complaints about financial management and guardianship services, which provide some insight into service quality and experiences. However, this is an incomplete measure as people under financial management and guardianship orders are a more vulnerable cohort than other NSW Trustee and Guardian customers and may require support to make a complaint. It is unclear whether the numbers and themes in complaints received are representative of broader experiences.

Complaints received and resolved by frontline staff are considered informal and are not counted, monitored and analysed by NSW Trustee and Guardian. Feedback on how complaints are handled by staff is also not sought from consumers. This raises a risk that NSW Trustee and Guardian may miss important information about systemic and recurring causes of complaints, and the needs and experiences of people under financial management and guardianship orders.

Government funding for guardianship services and financial management services has not kept pace with the growth in clients for these services. There is a risk that some clients are unknowingly subsidising others

Under its enabling legislation, NSW Trustee and Guardian cannot decline to receive a guardianship or direct financial management client once the court or tribunal make relevant orders. It is intended to be a provider of 'last resort' where no other suitable person is willing or able to be the guardian or financial manager for a client. Demand for guardianship and direct financial management services has been growing over time. Between FY2018 and FY2022, there was an eight per cent increase in the number of people who have the NSW Trustee as their financial manager and a 46% increase in the number of people who have the Public Guardian as their guardian.

NSW Trustee and Guardian also cannot decline to provide orders, authorise and direct private managers once one is appointed by a court or tribunal. It is responsible for overseeing private managers through reviewing their plans for managing the affairs of the client, scrutinising annual accounts, and considering proposals for significant expenditure. Between FY2018 and FY2022 there was a 32% increase in the number of people who have private managers.

The complexity of client circumstances has also grown over time, including multiple diagnoses and disabilities, the involvement of multiple service providers, the nature of the estates under financial management and the extent of decision-making authority under guardianship orders. NSW Trustee and Guardian's data analysis suggests the higher the level of complexity of a client's circumstances, the greater the number of activities, tasks and decisions need to be made by more senior staff on their behalf, increasing the costs of providing the service.

Direct financial management services are resourced predominantly by client fees, comprising 81% of revenue between FY2018-FY2022. Government funding makes up the balance and is directed to fee subsidies and waivers for low-wealth clients (those with assets apart from their principal place of residence, motor vehicle and furniture valued under $75,000). Sixty-eight per cent of direct financial management clients at 30 June 2022 were low-wealth and eligible for fee subsidies. The majority of revenue from the management fee charged for direct financial management services (almost 75%) comes from a minority of clients (around 18%).

Guardianship services are funded entirely by government funding as an annual grant, with the objective of providing these services at no cost to the client. Government funding is not provided for private financial management services; revenue is generated from fees. Fees for both direct financial management and private management are capped by regulation.

Until 2021–22, the amount of government funding for subsidised direct financial management services had been unchanged since 2009, and the Public Guardian grant was indexed to inflation and not to growth in client numbers which was greater than inflation. Revenue generated from private management fees has not been sufficient to cover NSW Trustee and Guardian's cost to deliver private management services.

NSW Trustee and Guardian has taken steps to try to capture data on the actual cost of providing guardianship and subsidised financial management services, and to estimate these costs in the absence of such data collection. However, IT system limitations have frustrated attempts to fully identify and quantify the true costs of service provision, including the varying complexity of client needs and related staff effort. Without data on actual costs to serve, NSW Trustee and Guardian cannot confidently demonstrate that its guardianship and financial management expenses are efficient or determine whether revenue - either from government funding or client fees - is sufficient to meet these costs.

New operating models being implemented from 2022 include roles and teams focused on identifying opportunities for early discharges from orders and providing advice to NCAT on the 'last resort' functions of NSW Trustee and Guardian which may assist in diverting some people from orders where there are other appropriate alternatives available. This may help to give effect to the legislative principles and reduce the numbers of direct financial management and guardianship clients.

NSW Trustee and Guardian has also used revenue from fees from its commercial offerings (such as estate administration) to fund services to guardianship clients, low-wealth direct financial management clients and private management. However, NSW Trustee and Guardian cannot determine whether high-wealth direct financial management clients are subsidising services for guardianship and low-wealth direct financial management clients without data on the actual costs to serve each client. There is a risk that some clients of these or other NSW Trustee and Guardian services are unknowingly subsidising financial management or guardianship clients.

Cross-subsidisation is a longstanding issue at NSW Trustee and Guardian. It is inequitable, inefficient and not aligned with NSW Treasury policy on government funding for non-commercial activities. NSW Trustee and Guardian recognises this and has undertaken a number of analyses over the audit review period to try to understand the need for - and costs of - its public guardian and financial management services. It has also attempted to improve internal process efficiencies, increase fees after stakeholder consultation, and repeatedly sought increased government funding for guardianship and subsidised financial management services over these five years.

To support the long term financial sustainability of the agency, NSW Trustee and Guardian has recommended to government that a demand-based funding arrangement be considered that aligns future funding with validated customer numbers and revenue. It suggested a demand-based funding arrangement could provide for minimum service levels and related key performance indicators.

However, NSW Treasury has advised that a demand-based funding arrangement requires validated data on the costs to serve as well as on client demand, and careful consideration. Without the ability to capture the actual costs of its guardianship and financial management service delivery, it will be difficult for NSW Trustee and Guardian to make the case for a demand-based funding model.

By May 2024, NSW Trustee and Guardian should:

1. Broaden governance arrangements to enable input to key decisions on financial management and guardianship services from:
   1. people with lived experience
   2. relevant peak bodies including the disability, aged care, and mental health sectors
   3. representatives of diverse communities including Aboriginal peoples; culturally and linguistically diverse groups; LGBTQI+ people.
2. Implement mechanisms to seek feedback on the effectiveness and quality of its financial management and guardianship services from clients under orders.
3. Implement a framework to:
   1. deliver competency-based training for staff in relevant roles to develop awareness and applied understanding of good quality service delivery for clients with disability, dementia, mental illness, cognitive impairments and other factors relevant to decision-making incapacity, in partnership with people with lived experience, relevant peak bodies and representatives of diverse groups
   2. monitor and assess staff competency in understanding and effectively serving clients with disability, dementia, mental illness, cognitive impairments and other factors relevant to decision-making incapacity
   3. identify intervals for and conduct refresher training and seek staff feedback.
4. Implement a risk-based quality framework to assess whether public guardian and financial management decisions are in line with policy and the legislative principles.

By November 2024, NSW Trustee and Guardian should:

5. Establish mechanisms to track and report publicly on its financial management and guardianship services including:
   1. all actions taken by NSW Trustee and Guardian to:
      • provide advice to the relevant court or tribunal to encourage the appointment of NSW Trustee and Guardian to be truly 'last resort'
      • identify opportunities for, and issue, financial management clients with section 71 authorities
      • encourage and support appropriate early discharges of guardianship clients
      • apply for the review and/or revocation of orders at the relevant court or tribunal
   2. the application of the legislative principles and national standards
   3. service quality
   4. performance of services over time
   5. outcomes for clients
6. Implement sufficient data collection, processes and/or IT systems to:
   1. inform on actual costs of service delivery including by complexity of client matters
   2. identify and address cross-subsidisation
   3. improve data quality and the sharing of relevant client information to support the application of the legislative principles.

NSW Trustee and Guardian is a NSW Government agency in the Stronger Communities cluster. It is constituted under the NSW Trustee and Guardian Act 2009 which merged the former Public Trustee's Office and the Office of the Protective Commissioner. Those agencies were created in 1914 and 1983 respectively, to administer functions that were previously those of the Supreme Court of NSW. NSW Trustee and Guardian provides the same services to clients as its predecessor organisations and includes the Public Guardian established under the Guardianship Act 1987. NSW Trustee and Guardian is accountable to the relevant Minister, the Attorney General.

NSW Trustee and Guardian supports the Public Guardian and the NSW Trustee, which have separate statutory functions. The legislative responsibilities for the Public Guardian and the NSW Trustee are provided in the NSW Trustee and Guardian Act 2009 and Guardianship Act 1987. These statutes enable the Public Guardian and the NSW Trustee to delegate their functions to a member of staff. As at 30 June 2022 approximately 600 full time equivalent staff were employed by NSW Trustee and Guardian as a whole (across all its service lines and functions), under the Government Sector Employment Act 2013.

Across the agency, NSW Trustee and Guardian functions include:

• acting as executor and administrator of deceased estates
• acting as a trustee responsible for managing trust property on behalf of another person or organisation in line with the trust terms
• drafting Will, Power of Attorney and Enduring Guardianship instruments, and educating the community about the importance of having these documents in place
• making decisions on behalf of people under guardianship or financial management orders as a guardian or a financial manager 'of last resort', and overseeing and assisting private financial managers.

NSW Trustee and Guardian's financial management and public guardian services are the focus of this audit.

NSW Trustee and Guardian received a funding boost of $41.5 million across four years in the 2021–22 State Budget to address the financial sustainability of the organisation as a whole. This included recognition of the increased demand for and complexity in the circumstances of people under financial management and guardianship orders.

Protective functions of the NSW Trustee and Guardian

If appointed to act for a person who is deemed by a court or tribunal as being unable to manage their own affairs, the NSW Trustee makes financial management decisions relating to the property and financial affairs of the person, and the Public Guardian makes guardianship decisions relating to the personal affairs of the person (see Exhibit 1).

Over time society has come to refer to the activities involved in management of the person and their estate as substitute decision-making. The legislation provides that the manager or guardian may exercise all the functions of the person under management were they not incapable of managing for themselves. From a legal perspective, these substitute decisions have the same effect as if the person had made the decision themselves. While the legal presumption is that a person has capacity to care for themselves and manage their own affairs, a financial manager or guardian can be appointed without the person's consent if the court or tribunal finds the person does not have relevant decision-making capacity.

The Public Guardian and the NSW Trustee may be appointed as substitute decision makers by the NSW Civil and Administrative Tribunal (NCAT) and the Supreme Court. The NSW Trustee may also be appointed by the Mental Health Review Tribunal. In practice, most decisions for the appointment of a guardian or financial manager are made by NCAT. The court and tribunal aim to appoint the Public Guardian and NSW Trustee as a 'last resort' - that is, when there is no one willing or suitable to fill the role, or there is significant family conflict regarding decision-making for the person. Neither the NSW Trustee nor the Public Guardian can refuse to accept an order for financial management or guardianship.

In relation to management of the estate of the person, the legislation uses the term 'protected person'. This is due to the history of the origins of the jurisdiction of the Supreme Court, and because:

• they relate to decisions or actions that need to be taken, which the person under an order cannot take because they are incapable of managing their own affairs
• due to this lack of competence, the person may be disadvantaged in the conduct of their affairs (for example, their money or property may be dissipated or lost, or they may be at risk of abuse or exploitation)
• decisions must be made in the best interests of the person on whose behalf they are made.

The Public Guardian makes decisions about healthcare, lifestyle, accommodation and/or medical and dental consents for a person under a guardianship order. This includes decisions such as where a person should live (for example, at home, in an aged care facility), what disability or other support services they receive, who can have access to them (for example, visiting schedules between conflicting family members) and consent to the use of restrictive practices on the advice of independent experts (for example, seclusion, chemical restraint such as anti-psychotic medication, environmental restraints such as limiting access to knives).

The NSW Trustee, when appointed to act as estate manager, undertakes tasks such as securing and collecting assets, income and entitlements; paying expenses, debts and designing budgets; investing financial assets; lodging tax returns; taking or defending legal proceedings and determining other arrangements. This is referred to as direct financial management.

When the court or tribunal appoint a private financial manager, the NSW Trustee may by order authorise and direct the functions of the private manager. Private managers may be family members, friends or commercial providers. The NSW Trustee also approves the release of funds to meet the client's needs, authorises the sale or purchase of major assets by the private manager, reviews annual accounts for compliance, and takes action on non-compliance.

The Public Guardian does not have the same statutory provisions in respect of private guardians as the NSW Trustee has in relation to private managers, but under the legislation must provide private guardians with information. NSW Trustee and Guardian's private guardianship functions are outside the scope of this audit.

Exhibit 1: Decision-making capacity

'Capacity' is a legal term that refers to the ability of a person to make decisions for themselves. Generally, as the term is currently interpreted, when a person has capacity to make a specific decision they can: understand the situation, facts, and information about the decision understand the choices available to them weigh up the consequences and benefits of making the decision communicate the decision. A person’s capacity can change or fluctuate in different circumstances, at different times, about different types of decisions and with different types of support. For example, someone might be able to make personal decisions about where they want to live, but not financial decisions such as whether they want to sell their house. Every person over the age of 18 is presumed to have the ability to make their own decisions regardless of whether they have a disability, mental illness, or cognitive impairment. Only a court or tribunal can legally determine that a person lacks decision-making capacity and then appoint a guardian and/or financial manager to make decisions for them. Under the Guardianship Act 1987 the NSW Civil and Administrative Tribunal (NCAT) may make a guardianship order if the Tribunal is satisfied that the person is in need of a guardian. In considering this, the Tribunal must have regard to: the views of the person, their spouse or carer the importance of preserving the person's existing family relationships and their particular cultural and linguistic environments, and the practicability of services being provided to the person without a guardianship order being made. With respect to financial management orders, NCAT may only make a financial management order in respect of a person if the Tribunal is satisfied that: the person is not capable of managing those affairs, and there is a need for another person to manage those affairs on the person’s behalf, and it is in the person’s best interests that the order be made. Initially, Supreme Court and NCAT cases deciding whether a person was capable of managing their affairs compared the person's ability to ideas about what was involved in conducting the 'everyday affairs of ordinary people'. However, judicial officers and tribunal members now focus on assessing the person's own capacity to do what the person themself is proposing to do. This includes looking at: the actual assets of the person concerned and their own 'ordinary affairs of living' the way the person is able to look after these, considering their present and prospective wants and needs, and those of family and friends the risk of neglect, abuse or exploitation. In making such an assessment, the court or tribunal may reflect on the person's past and present experiences, the support systems available to the person, and the extent to which the person can be relied on to make sound judgements about their own welfare and interests.

Relevant legal powers and obligations

Under the law, the NSW Trustee has broad powers and functions in relation to financial management and the Public Guardian in relation to guardianship once appointed under an order by a court or tribunal to act for a person. These include:

• all the functions the person under a financial management order has and can exercise, or would have and could exercise if under no incapacity
• responsibility for managing the financial affairs of a person under an order, including:
  • collecting income and benefits
  • making payments to and from client accounts
  • managing real property and leases
  • managing financial planning and tax matters
  • taking or defending legal proceedings
• subject to any conditions specified in a guardianship order:
  • custody of the person to the exclusion of any other person
  • all the functions of a guardian of that person that a guardian has at law or in equity
  • the power to make the decisions, take the actions and give the consents (in relation to the functions specified in the order) that could be made, taken or given by the person under guardianship if he or she had the requisite legal capacity.
• the power to sign and do all such things as are necessary to give effect to any function of the guardian
• the power to take such measures or actions as are specified in the order to ensure the person under guardianship complies with any decision of the guardian in the exercise of the guardian's functions.

In all of its specific functions, NSW Trustee and Guardian is in a fiduciary relationship with the people it serves. The term 'fiduciary' means trust, and a fiduciary relationship may be formed in law when there is a relationship of trust and power imbalance between parties - such as between a solicitor and client, doctor and patient, teacher and student. This creates legal duties for the person in whom the trust has been placed. In relation to financial management and guardianship services, this includes an obligation to act in the best interests of the client, to avoid conflicts with clients' interests, and to not profit from the relationship. These obligations exist in common law, in addition to the legislative principles (see Exhibit 2 below).

The legislation provides clients of financial management and guardianship services with the right to seek internal reviews of significant decisions NSW Trustee and Guardian makes for them, and an independent external review of these decisions through the NSW Civil and Administrative Tribunal. Unlike other Australian jurisdictions, there is no Public Advocate or equivalent in NSW with legal responsibility to safeguard the rights of; monitor the impact of legislation, policies, programs and services on; and undertake systemic advocacy on behalf of adults with impaired decision-making.

Legislative principles and substitute decision-making

Exhibit 2: The legislative principles

The NSW Trustee and Guardian Act 2009 and the NSW Guardianship Act 1987 establish legislated principles that apply to the exercise of guardianship and financial management functions (whether exercised by NSW Trustee and Guardian or private guardians or managers). In summary, these are that: the welfare and interests of clients should be given paramount consideration the freedom of decision and freedom of action of clients should be restricted as little as possible clients should be encouraged, as far as possible, to live a normal life in the community the views of clients on financial management and guardianship functions should be taken into consideration the importance of preserving the family relationships and the cultural and linguistic environments of clients should be recognised clients should be encouraged, as far as possible, to be self-reliant in matters relating to personal, domestic and financial affairs clients should be protected from neglect, abuse and exploitation.

In New South Wales, the legislative framework is one of a ‘best interests’ substitute decision-making model. A substitute decision-making model is one where the decision maker steps into the shoes of the person and makes decisions on their behalf. In the substitute decision-making model, decisions are based on the best interests of the person concerned, in consultation with the person where possible, rather than solely on their will and preferences.

Legal decisions interpreting these legislative principles have held that the first – often short-handed as the 'best interests' principle – should be given the greatest importance in every case, and that the other principles cannot be elevated above it. Judicial and tribunal members have observed that, while each of the principles are to be considered when a substitute decision is made, the extent to which they are applied will depend on the particular circumstances of individual client matters. The best interests principle compels the decision maker to give regard to the welfare and interests of the person but the other principles do not fetter or limit a substitute decision maker's discretion, or otherwise mean that the decision maker must come to a particular decision if they have discretion. Legal decisions on the concept of best interests have held that this means for the benefit of the individual and not for the benefit of the state or others, nor for the convenience of carers. It also requires taking the person’s views into account, and including non-financial aspects such as emotional and physical wellbeing in considering what is in their best interests.

An alternative model is 'supported decision-making'. This refers to processes and approaches that assist people to exercise their autonomy and legal capacity by supporting them to make decisions. This approach seeks to give effect to the will and preferences of the person requiring decision-making support wherever possible. For example, in its 2018 inquiry into the Guardianship Act, the NSW Law Reform Commission recommended alternative principles be adopted to those outlined in Exhibit 2. These included that people under guardianship orders 'have the right to make decisions that affect their lives (including decisions involving risk) to the full extent of their ability to do so and to be assisted in making those decisions if they want or require assistance.'

There has been a longstanding legal and community push for Australian guardianship and administration systems to move from substituted to supported decision-making, accelerated by the United Nations Convention on the Rights of Persons with Disabilities which Australia ratified (with exceptions for guardianship and financial management functions) in 2008. The Australian Law Reform Commission in 2014, and the NSW Law Reform Commission in 2018, each recommended that a formal framework for supported decision-making and (as a last resort) substituted decision-making be adopted, but relevant governments have not accepted or acted on these recommendations.

The current Disability Royal Commission is again exploring the potential for related reform across Australia. The UN Convention, law reform commission inquiries and advocates' calls for supported decision-making models are at odds with the existing legal decision-making framework in the Guardianship Act 1987 and NSW Trustee and Guardian Act 2009.

NSW Trustee and Guardian has observed that this means the financial management and guardianship services it provides under the legislative framework of substitute decision-making can be out of step with community expectations for these services.

National standards

In addition to the legislative principles, there are voluntary national standards for guardianship and direct financial management services that have been agreed to by every Australian jurisdiction.

These were negotiated through the Australian Guardianship and Administration Council (AGAC) in 2016 and 2018. The principles are set out in Exhibit 3 below.

Exhibit 3: Summary of the national standards for guardianship and direct financial management services

National standards for guardianship

National standards for financial managers

Provide information Support decision-making capacity Ascertain will and preference Advocate for the person’s rights to access housing, health care, support services and to participate in the community Protect the person from abuse, exploitation and neglect Make decisions and review decision-making on a regular basis Record information Participate in guardianship reviews by the relevant board, tribunal or court Promote professional development Observe privacy and confidentiality

Provide information Advocate for the person with respect to financial and property matters Seek the person’s views on decisions and provide opportunities for them to build capacity Protect the person’s money and assets Make financial decisions Invest money Make payments Record information Respect privacy and confidentiality Protect and respect the person’s legal rights involving their money and assets Be professional Support the review of orders

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Parties to the national standards are expected to adhere to them to the extent possible within their existing legislative framework for guardianship and financial management. The standards do not have the force of law, are not enforceable, and compliance with the national standards is not monitored by AGAC. If there is conflict between parties' legislative requirements and the national standards, the former prevail.

Key client characteristics

Over the five-year audit review period (FY2018-FY2022), there has been an eight per cent increase in people who have the NSW Trustee as their financial manager, a 32% increase in the number of people who have private managers and a 46% increase in people who have the Public Guardian as their guardian. Demand factors include a growing and ageing population, increasing incidence of dementia, and increasing complexity in both clients’ needs and the service landscape over time, particularly since the introduction of consumer-directed supports under the National Disability Insurance Scheme (see Exhibit 16).

As at 30 June 2022:

NSW Trustee and Guardian had:

• 12,566 clients under direct financial management orders
• 6,284 clients under private financial management orders
• 3,533 clients under guardianship orders.

Direct financial management and guardianship clients were most commonly:

• between the age of 51 and 70 years old
• living with psychiatric illnesses or intellectual disabilities
• living in disability group homes or aged care facilities.

Most direct financial management and guardianship clients resided in Greater Sydney local government areas (LGAs). Regional LGAs with the highest numbers of clients were: Cabonne, Newcastle, Central Coast and Lake Macquarie.

NSW Trustee and Guardian also had two to three times the proportion of Aboriginal clients than the proportion of Aboriginal people in the New South Wales population, with approximately nine per cent of guardianship clients and seven per cent of direct financial management clients identifying as Aboriginal.

Graphs and maps of key client characteristics are included in Appendix two.

The objective of this audit was to assess whether NSW Trustee and Guardian is effectively delivering guardianship and financial management services aligned to its legislative functions and principles, and relevant non-legislative standards. It was guided by three audit questions:

• Does NSW Trustee and Guardian align its service delivery with its legislative functions and principles, and relevant standards?
• Does NSW Trustee and Guardian drive and monitor performance to give effect to its legislative functions and principles, and relevant standards?
• Has NSW Trustee and Guardian effectively planned the use of additional funding to improve service delivery and adherence to its legislative functions and principles, and relevant standards?

The audit review period was 1 July 2017 to 30 June 2022.

For most of this five-year period, NSW Trustee and Guardian did not have enhanced funding, new operating models and increased numbers of staff in place.

Existing governance arrangements are in line with enabling legislation and standards

The legislative functions and responsibilities of the NSW Trustee, and of the Public Guardian, are provided in both the NSW Trustee and Guardian Act 2009 and the Guardianship Act 1987. These functions and responsibilities are accurately reflected in different delegations instruments, policies and procedures for financial management and guardianship staff in relevant organisational divisions of NSW Trustee and Guardian. This was also evident in staff practice we observed.

Financial management and guardianship duties are separated between different organisational divisions within the agency. For each of these functions – where appropriate – information is collected, and major decisions are made independently of each other. For example, public guardian staff make accommodation decisions for relevant clients separately from financial managers’ decisions about financial affairs.

Although the national standards are not often referenced by NSW Trustee and Guardian, its practice also reflects the second standard which provides that ‘the financial manager cannot make decisions about where the person lives or what they do other than in respect to the management of their money and any property or investments that they may have. Any such decisions however need to be affordable to the person, and where feasible the financial manager must endeavour to speak to the person about this.’

NSW Trustee and Guardian also segregates duties between different teams within divisions, to avoid one staff member being responsible for making decisions about all aspects of a client's life. For example, responsibility for the decision to sell a client’s property is made by their financial manager while a separate property team is responsible for managing the sale process. Similarly, a decision to pursue a legal matter on behalf of a client is made by their financial manager who then refers the matter to the NSW Trustee and Guardian legal team to handle.

NSW Trustee and Guardian's delegation instruments are clear, but policies and procedures are not regularly updated

NSW Trustee and Guardian staff are clearly delegated tasks and authorities based on their level of seniority. All of the legislative powers and requirements are articulated in NSW Trustee and Guardian's policies and procedures. However, many policies and procedures that provide more specific guidance on practice for staff have not been recently reviewed and updated.

Most of the current public guardian and direct financial management policies and procedures that detail how staff are expected to preform specific functions have not been updated since 2019–2020 and have lapsed review dates. Outdated policies and procedures were identified as an issue in internal reviews in 2019 and 2021.

Staff feedback in internal reviews, and our observations of financial management and guardianship practice indicate that many staff rely on their team members for assistance when interpreting the policies and procedures. While this is to be expected to some extent, it raises the risk of inconsistent practice between teams and challenges when staff work remotely or do not have experienced team members to consult.

In the 2022 annual NSW Public Sector ‘People Matter Employee Survey’:

• 60% of guardianship staff said they receive the support they need to do their job well. This is three percentage points lower than that for the Sector average.
• 39% of financial management staff said they feel they get the support they need to do their job well. This is 24 percentage points lower than the average for the Sector.

Over the audit period, significant changes have been made to individual roles, financial management and guardianship teams, systems, and operating structures. It is important that policies and procedures are updated to reflect these changes, and shared in a way that provides current, consistent guidance to staff.

There is limited guidance on how guardianship and financial management staff should apply the legislative principles in practice

The primary legislative principle that applies to guardianship and financial management decision-making - to give paramount consideration to the welfare and interests of clients – is rightly emphasised in NSW Trustee and Guardian's relevant policies and procedures. This is known as the ‘best interests’ principle.

In addition to giving paramount consideration to the welfare and interests of clients, the decision-making procedures state that NSW Trustee and Guardian staff should also consider the six other legislative principles when making decisions for people under financial and guardianship orders (see Exhibit 2).

Given that the legislative principles are broad and open to interpretation, effectively applying the relevant legislative principles in practice can be complex. However, there is limited guidance on how financial management and guardianship staff should consider each of the legislative principles in practice. Although the national standards for financial managers and guardians provide a framework of service standards that complement the legislative principles, they are not often referred to in NSW Trustee and Guardian's policies and procedures or by staff.

As a result, staff may rely on their expertise and experience to interpret and apply the legislative principles to their decisions rather than on documented practice frameworks and guidelines. This could particularly impact the new staff recruited to financial management and guardianship services in 2022. It also increases the risks of inconsistent practice of applying the legislative principles to decisions and actions between staff and teams.

While individual decisions for each client under an order may be diverse, and specific documented procedures may not always be possible, it is essential that all staff have access to guidance and support to apply the legislative principles in practice.

Revised operating models for financial management and guardianship services that NSW Trustee and Guardian developed when it received additional organisational funding in the 2021–22 State Budget includes one new legal officer for each division. Part of the role of these new officers is to provide guidance and support to all staff on fulfilling their legislative obligations and applying the legislative principles to their decisions. The audit cannot assess the impact of these new roles as they had only recently been recruited at the time of writing.

NSW Trustee and Guardian's staff induction programs have recently improved but mandatory and refresher training is limited

NSW Trustee and Guardian developed a new staff induction program for the financial management and public guardian staff recruited in 2022. Our observations of these sessions found that they provided new starters with a comprehensive understanding of how to follow operational procedures to perform guardianship and financial management functions. However, there are limited opportunities for staff to formally develop and update their specialist skill sets to provide financial management and guardianship services to clients in line with relevant legislative requirements, policies and procedures.

Prior to 2022, induction sessions focused on the role and objectives of the organisation with respect to financial management and guardianship services. They provided limited guidance to staff on understanding operational requirements and how to adhere to the enabling legislation, including the legislative principles, in practice.

New and existing financial management and guardianship staff receive ongoing 'on-the-job' training through supervision, buddy systems and team meetings. 'Complex case review' internal team meetings can also be used to support staff to resolve complex cases such as clients with significant conflict between their stakeholders (such as family members or different service providers) and/or conflict with NSW Trustee and Guardian about specific decisions. External stakeholders are not involved in these complex case reviews and it is unclear how often they occur.

There is limited formal staff training to refresh and develop professional skills. In 2022, NSW Trustee and Guardian conducted a training needs analysis of direct and private financial management staff. Guardianship staff were not included in this analysis. NSW Trustee and Guardian advised that it was undertaking analysis of the training needs of all staff across the organisation at the time of writing.

Some of the high priority training gaps identified for direct and private financial management staff are relevant to NSW Trustee and Guardian’s legislative obligations including:

• understanding fiduciary responsibilities and legal terms
• delegations and decision-making
• customer service
• effective record keeping
• cultural awareness and trauma informed practice.

NSW Trustee and Guardian advises that it is in the process of developing additional training materials in response to the training needs gaps identified. Training content is usually developed and delivered internally, rather than being co-designed with non-government sector representatives, clients, or other people with relevant lived experience of disability and NSW Trustee and Guardian services.

More attention needs to be placed on disability awareness training

Clients under guardianship and financial management orders are often living with a range of conditions including intellectual and other disabilities, dementia, mental illnesses, brain injuries, neurodivergence and age-related physical and cognitive impairments.

However, for most of the audit review period, there was no specific training for staff to develop their understanding of the different and sometimes complex conditions that may affect their clients' decision-making capacities.

'On the job' training assumes that existing experienced staff have sufficient understanding of, and experience in, serving people with impaired decision-making capacity. It is not clear that NSW Trustee and Guardian has tested this assumption, such as through assessing relevant competencies and training needs, and consulting with clients and advocates on their experiences.

To address this gap, a general disability training course was delivered for the first time to staff in 2021. New and existing staff are expected to complete this course face-to-face or online through an e-learning module. NSW Trustee and Guardian advises that the course was informed by consultations with People With Disability Australia, allied health professionals, and people with lived experience. Nevertheless, the training course is brief and does not cover the full range of conditions that may impact decision-making capacity in the NSW Trustee and Guardian financial management and guardianship client population. There is also no dedicated staff training on engaging with people with mental illness, dementia, acquired brain injury or other relevant conditions.

NSW Trustee and Guardian’s executive leadership team informed us that they recruit guardianship staff from the disability and other relevant sectors, and have recently increased their focus on recruiting financial management staff with experience in these sectors as well. NSW Trustee and Guardian also employs people with disability, and reports that 6.3% of its staff identified as having a disability in an employee survey in 2022. This exceeds the New South Wales whole-of-government benchmark of 5.6% of employees with disability across the NSW Public Sector.

While this is essential, it is important that all staff receive ongoing training to help them continue to develop their skills and deliver their services in line with regular feedback from clients, the legislative principles and the changing environment.

High caseloads of financial management and guardianship staff limit the time available to consider and apply the legislative principles to individual decisions

Over the audit period, frontline staff have had consistently high caseloads and workloads. This has limited the time available to them to collect sufficient information about clients and consider how each of the legislative principles may apply to individual decisions for clients.

Direct financial management and guardianship staff must collect and assess information about the client to consider their 'best interests' and determine which of the other six legislative principles should apply to individual decisions. For example, staff need information about the client's view, situation, and context to know what 'freedom', 'self-reliance', 'normal' and 'preserving relationships' might look like for the client in practice (see Exhibit 2). Information about the client's situation and context also assists staff in assessing the client's risk of experiencing neglect, abuse, and exploitation.

Information to support staff decision-making is expected to be sought from clients, their family members and a range of relevant client stakeholders such as: NDIS support coordinators, disability support workers, hospital social workers, medical practitioners, aged care facility staff, disability group home and boarding house managers.

However, in 2019, an internal review of guardianship services found that evidence required to make decisions was not consistently gathered by guardianship staff. Notably, the client's view on certain decisions was not recorded in 36% of the files reviewed. A later review in 2021 found that guardians were stretched to capacity, and that tasks were not sufficiently allocated to staff based on their role description, skill sets and delegation.

Internal reviews of financial management services in 2021 similarly identified that frontline staff found it difficult to access the information they needed to make decisions for direct financial management clients, and that high caseloads and inefficient allocation of tasks to staff prevented them from proactively delivering services that promote good client outcomes.

In 2021–22, NSW Trustee and Guardian estimated the average time spent by frontline staff with direct financial management and/or guardianship clients or on client matters per week, based on ratios of staff numbers to caseloads over time. This modelling estimated that frontline staff were spending less time each week on average in 2020 compared to 2011. NSW Trustee and Guardian argued that without additional investment, this would drop to an average of 14 minutes per week per client for guardianship and 11 minutes per week per client for direct financial management services in 2026, as outlined in Exhibit 4.

Guardianship services are funded by government grant, financial management services by fee revenue with government funding for direct financial management fee subsidies and waivers

Across the agency as a whole, more than three-quarters of the NSW Trustee and Guardian’s overall revenue is from fees (including for services outside the scope of the audit, such as will preparation) and investments. The balance is funded by the NSW Government. For this reason, it is considered a self-funded agency by NSW Treasury definitions.

Direct financial management services are resourced predominantly by client fees, comprising 81% of revenue between FY2018-FY2022. Government funding makes up the balance and is directed to fee subsidies and waivers for low-wealth direct financial management clients (those with assets apart from their principal place of residence, motor vehicle and furniture valued under $75,000). Guardianship services are funded entirely by government funding as an annual grant, with the objective of providing these services for free to the client. Government funding is not provided for NSW Trustee and Guardian's private financial management services.

Government funding for NSW Trustee and Guardian's subsidised direct financial management services (and other services such as free will-making for pensioners) is known as 'Community Service Obligation' (CSO) payments. NSW Treasury defines CSOs as activities expected to be undertaken by public non-financial corporations and public financial corporations for specific policy objectives, that do not achieve a commercial return, and would not be undertaken by comparable private sector businesses.

For the five-year audit review period (FY2018-FY2022) NSW Trustee and Guardian as an agency received total government funding of $95.6 million. This included $50.6 million for the Public Guardian grant, $30.8 million in CSO payments for direct financial management and other services and $14.2 million in other funding including to support guardianship and financial management services. Over the same period, NSW Trustee and Guardian received $128 million in fee revenue for direct financial management services. Financial management fees are further discussed in section 2.3 below.

A gap between costs and revenue was independently identified in 2014, along with opportunities for improving processes and efficiencies

In 2014, at the request of the NSW Government, the Independent Pricing and Regulatory Tribunal (IPART) reviewed the fee structure for all of NSW Trustee and Guardian's charged services (that is excluding guardianship services).

IPART found that NSW Trustee and Guardian's expenses as an organisation had steadily increased since it was established in 2009 through the merger of the Office of the Public Trustee and Office of the Protective Commissioner (which administratively supported the Public Guardian), growing at an average annual rate of 6.7% while total revenue had remained relatively flat. NSW Trustee and Guardian advised us that, at the time of the 2009 merger, the Office of the Protective Commissioner carried a deficit of $11 million and the expectation was for the Public Trustee reserves to clear the debt and fees from estate administration to cross-subsidise other areas of work.

IPART 's position was that vulnerable and disadvantaged clients should only pay fees to fund NSW Trustee and Guardian's efficient costs, and any costs above the efficient costs should be borne by the agency, with subsidy (CSO payments) for clients who cannot afford to pay the full efficient fees. Based on a confidential report provided by NSW Trustee and Guardian, IPART considered that there was scope for efficiency savings of at least 20% across NSW Trustee and Guardian's operations, such as through removing duplicated systems and unnecessary processes.

The fees IPART recommended sought to recover the costs of efficient operating expenditure, depreciation and a return on capital invested in the business, with depreciation and return on capital recovering the cost of capital expenditure over time. Overall, IPART expected its recommendations would lead to a 12% fall in regulated fee revenue, a 20% reduction in operating expenses and an overall shift from a $7 million deficit to a $1 million surplus for NSW Trustee and Guardian as an organisation.

NSW Trustee and Guardian did not disagree with the 20% efficiency savings target proposed and reported to IPART in the course of the 2014 review that it had identified a range of initiatives to reduce operating costs, including staff redundancies and new unified client management IT system.

However, NSW Trustee and Guardian advised us that the 'Transformation' project commenced after the IPART review did not achieve the efficiency savings expected. NSW Trustee and Guardian considers that 'Transformation' resulted in the rationalisation of over 100 frontline roles which lost corporate knowledge and 'decimated' its services; and the implementation of a new IT system was only partially successful.

Following the commencement of a new CEO and changes to the agency's executive from January 2018, NSW Trustee and Guardian also began implementing a new five-year program of business improvements in 2019, such as automating some tasks. It estimated that a savings of 4.5 full time equivalent staff had been made in the first year. But NSW Trustee and Guardian considered, and advised the Attorney General, that ongoing business improvements would not be able to close the gap on the funding required to provide free guardianship and subsidised direct financial management services.

NSW Trustee and Guardian does not have data on its actual costs to serve to demonstrate if costs are efficient or revenue is sufficient

NSW Trustee and Guardian has taken steps to try to capture data on the actual cost of providing guardianship and subsidised financial management services, and to estimate these costs in the absence of such data collection. However, system limitations have frustrated attempts to fully identify and quantify the costs of service provision, including the varying complexity of client needs and related staff effort. Without data on actual costs to serve, NSW Trustee and Guardian cannot confidently demonstrate that its guardianship and financial management expenses are efficient, or determine whether revenue - either from government funding or client fees - is sufficient to meet these costs.

To establish actual and efficient costs in providing services requires activity-based costing data including:

• the overall cost of each service
• how many transactions were delivered
• how much time went into each transaction
• which client benefited from each transaction.

NSW Trustee and Guardian does not have such a costing system in place. While the quantity of client transactions are being captured in NSW Trustee and Guardian's data, these do not indicate their complexity or the time taken by staff to attend to them.

In 2016, NSW Trustee and Guardian began implementing a new client relationship management IT system with activity-based costing capability, known as the 'Trustee and Guardian System' (TAGS). This aimed to replace a range of legacy client management and accounting systems used by different divisions of the organisation. The system was designed to be a 'single-source-of-truth' for all client information in a scalable cloud-hosted platform accessible to staff on-site and working in mobile outreach teams.

In 2017–18 NSW Trustee and Guardian commissioned a review of work on the TAGS project, to inform a new digital strategy to be developed during 2018–19. The total project cost was $15 million and TAGS was terminated following technical issues with full implementation. Subsidiary cloud-based systems were implemented for Public Guardian and private management, however no new direct financial management systems were implemented.

Without the capability to collect data on the actual costs to provide its services, NSW Trustee and Guardian has commissioned five separate consultant analyses, and undertaken one of its own, to try to estimate costs for guardianship and subsidised direct financial management services. The most recent effort was in September 2020 after NSW Trustee and Guardian, as a whole, ran an operating deficit that it expected to increase over the forward estimates.

In this latest analysis, consultants engaged by NSW Trustee and Guardian:

• identified the activities that NSW Trustee and Guardian provide across its commercial and non-commercial services
• undertook an activity-based cost allocation exercise to distribute all NSW Trustee and Guardian expenses and revenue to services
• estimate the actual value of CSO activities delivered by NSW Trustee and Guardian and compare this to the government funding received.

The consultants estimated that the full cost of NSW Trustee and Guardian's CSO activities amounted to $24.7 million for 2019–20 while government funding totalled $16.3 million, a shortfall of $8.4 million. For 2020–21 this shortfall was expected to increase to $12.8 million, in the absence of additional government funding or fee amount increases.

This gap between government funding and the services funded by it was attributed to:

• an increase in demand from non-fee paying or low fee-paying clients
• an increase in the complexity of decision-making (time per client matter), while the amount of the CSO payment for subsidised financial management services had been unchanged since 2009
• the Public Guardian grant was indexed to inflation and not to growth in client numbers which was greater than inflation.

The consultants also considered the NSW Trustee and Guardian fee structure for its services across the organisation. It found that fee revenue had been negatively impacted by fluctuating asset prices, low interest rates, equity markets and a long term decline in commercial service customer numbers such as will making and estate administration. The consultants concluded that fee adjustments, in isolation, would:

• spread the funding burden evenly over most fee-paying products, but
• not eliminate cross-subsidies between different services
• not cover operating deficits in the medium term when CSO activities like guardianship services and subsidised direct financial management services for low-wealth clients continued to escalate.

Government funding does not reflect the number of guardianship or direct financial management clients

Under its enabling legislation, NSW Trustee and Guardian cannot decline to receive a guardianship or direct financial management client once the court or tribunal make relevant orders appointing the Public Guardian or NSW Trustee. It is intended to be a provider of 'last resort' where no other person can be the guardian or financial manager for a client.

Government funding for guardianship services and subsidised direct financial management services is not determined by a demand-based funding model (as it is for courts or public education). It is not linked to the number of clients NSW Trustee and Guardian has for these services each year, the rate of growth in client numbers over time, or the volume or type of activities delivered.

In 2020 NSW Trustee and Guardian briefed the Attorney General that government funding was no longer meeting the full estimated cost of delivering free guardianship services and subsidised direct financial management services for low-wealth clients. NSW Trustee and Guardian advised that CSO funding had increased 12.6% since 2010–11 while the demand for the services funded had increased by approximately 40% in the same ten-year period.

The higher rates of appointments of the Public Guardian and the NSW Trustee by the courts and tribunals have not been offset by the rate of exits (where a person is no longer under guardianship or direct financial management because they have been discharged by NSW Trustee and Guardian, the order has been finalised by the relevant court or tribunal, or the person has died).

Our analysis of data provided by NSW Trustee and Guardian also found that the growth in client numbers was greater than the growth in government funding for guardianship services over the five-year audit review period, as illustrated in Exhibit 14. Taking 2017–18 as the base year, client numbers increased by up to 46% in this time. Over the same period, until additional funding was received in the 2021–22 State Budget (discussed below), funding for guardianship services grew by ten per cent or less after adjusting for the impacts of inflation.

NSW Trustee and Guardian provides two types of financial management services: direct and private. Direct financial management services involve making financial decisions for people under financial management orders where the NSW Trustee has been appointed by a court or tribunal as the financial manager.

Private financial management services involve the NSW Trustee overseeing the performance of a private financial manager appointed by a court or tribunal. Often referred to as 'private managers', they may be family members, friends or commercial providers like private trustee companies, solicitors or accountants.

NSW Trustee and Guardian observes that in its role with respect to private management, it has two 'customers' - the private manager, and the person whose finances have been placed under management. In looking after the interests of both, NSW Trustee and Guardian's relevant responsibilities include:

• issuing Directions and Authorities that give the private manager authority to manage the client's estate
• authorising implementation of the private manager's plan
• checking annual accounts submitted by the private manager
• seeking reports from an authorised visitor or other professionals about the client's needs
• authorising the sale or purchase of major assets by the private manager
• seeking a review of the private manager's appointment by the relevant court or tribunal if they do not comply with their obligations.

Relevant legal cases have observed there are different advantages to appointing the NSW Trustee and a family member or friend as a private manager:

• Advantages to appointing the NSW Trustee as financial manager include:
  • the independence of the statutory office
  • a dispassionate and neutral approach in situations of family
  • conflict and divided views as to the best interests of the client
  • expertise and experience in managing estates
  • the security provided to an estate against loss and damage.
• Advantages to appointing a family member as a private manager include:
  • more economic management of smaller estates
  • a greater familiarity with the assets and liabilities concerned
  • greater capacity of the client to interact with the manager, and to exercise a greater influence over the broad directions of the management of the estate
  • love and affection for, and knowledge of, the client and concern for their quality of life.

The preference of the court or tribunal is to appoint a family member or friend as a private manager before considering the appointment of the NSW Trustee – where that is appropriate and it is in the best interests of the client for that to happen.

NSW Trustee and Guardian has the power to charge fees for both its direct and private financial management services. NSW Trustee and Guardian offers fee subsidies for low-wealth clients of both services, but does not receive funding from government for private financial management subsidies.

Financial management fees reflect legislative authority

The NSW Trustee has legislative authority to charge fees for financial management services but the Public Guardian does not have legislative authority to charge fees for guardianship services. Public Guardian services, and financial management services for low-wealth clients, are resourced by NSW Government funding and provided free or at a subsidised rate. NSW Trustee and Guardian fees can be determined in whatever way the organisation considers appropriate, but must be framed in regulation and therefore first approved by the Attorney General and not disallowed by Parliament.

The NSW Trustee and Guardian Regulation 2017 sets out the fees that apply. For financial management services, some are specific (for example, up to $10 per month for account administration and audit), others are open to discretion (for example, fees that NSW Trustee determines to be appropriate for taxation investigation or lodgement). Some are capped (such as a maximum hourly rate or a maximum amount charged per year). Fees specifically applicable to financial management are exempt from the goods and services tax (GST).

The NSW Trustee and Guardian fees for financial management services published on its website reflect the provisions of the Regulation, except:

• The Regulation calculates fees for direct financial management clients by reference to the gross amount of the value of the client's real and/or personal assets without deduction of their secured or unsecured debts or liabilities, not including the value of the client's principal place of residence. NSW Trustee and Guardian uses a similar basis for calculating fees but also excludes assets such as accommodation bonds or items for personal use (for example, motor vehicles and furniture). It refers to the assets not excluded as 'chargeable assets'.
• The Regulation does not specify if or when fee reductions should apply, while NSW Trustee and Guardian provides these to clients with chargeable assets below a certain value. An internal audit has estimated that the discount applied by NSW Trustee and Guardian for the direct financial management establishment fee meant the organisation did not receive approximately $72,000 in revenue in 2021.

All but one of the financial management fees have remained the same since 2016

Amendments to the Regulation proposed by NSW Trustee and Guardian to increase and index some fees have been publicly consulted on, but not yet approved by the Attorney General.

NSW Trustee and Guardian's current regulated fees were set on 1 July 2016 at the levels recommended by the Independent Pricing and Regulatory Tribunal (IPART) in a 2014 review, and were not indexed to inflation or any other factor. IPART used a set of principles to guide its recommendations:

• Efficiency: fees should reflect the efficient cost of providing the service. Clients should pay for the services they use.
• Fairness: clients' individual ability to pay (indicated by client wealth) should be considered when determining how much each client should contribute to the efficient cost of the service.
• Simplicity: fees should be simple, straightforward and able to be easily interpreted by clients.
• Transparency: fees should be publicly available and there should be no hidden fees or unexpected expenses for clients.

In 2019, NSW Trustee and Guardian was given permission by government to increase a number of fees and charges within the discretion of the CEO, in the context of a review of its regulated fees. In 2021, it consulted with external stakeholders on increasing the fee caps set in the Regulation.

NSW Trustee and Guardian worked with the Department of Communities and Justice to propose amendments to the Regulation for the Attorney General's approval. When this was received, the first tranche of changes were made and became effective from 1 January 2022. In relation to financial management services, this increased the fee cap for services related to the common funds (see Appendix four and Appendix five). The Regulation amendment lifted the fee cap from 0.1% to 0.35% per annum calculated on:

• the value of the investment, when relating to the management of client estates
• the capital sums invested in the common fund, in any other case.

The common fund management fee had previously been capped at one per cent, but was reduced in the Regulation following the 2014 IPART review.

Other changes to the regulated fees for financial management services that NSW Trustee and Guardian proposes have been publicly consulted on, but not yet approved by the Attorney General. These include to:

• increase the maximum fee cap for the ongoing management of a direct financial management client's estate (calculated at 1.4% of the value of the estate) from $15,000 to $20,000 per annum
• allow NSW Trustee and Guardian to set an hourly fee of up to maximum $275/hr for providing financial planning advice services, to reflect the variety of work involved (clients eligible to receive financial advice must have assets valued over $250,000 excluding their ownership of their place of residence and living expenses)
• remove other charges including estate fees related to an asset of the estate that is real estate
• introduce Consumer Price Indexation on all non-percentage-based fees and caps.

We identified one instance where the fees charged did not comply with the Regulation

As part of the annual financial audit of NSW Trustee and Guardian, which assesses whether the agency's financial statements are a true and fair representation of its financial state, the Audit Office examines a sample of fees charged and considers these against the rates in the Regulation. If an error or exception is identified, this is discussed with agency officers in order to be addressed and, if significant, reported to agency management and to Parliament. The Audit Office financial audit team has not identified any material exceptions in the fee samples examined over the past five financial years.

Separate analysis of NSW Trustee and Guardian fees data over the last three financial years that this audit conducted tested whether any regulated fee caps had been exceeded in practice. This found that just one direct financial management client, out of approximately 12,400 in each of the three financial years examined, had been charged over the fee cap for the management fee.

NSW Trustee fees are not comparable to commercial operators because services are not equivalent

A concern expressed to the audit by consumers and external stakeholders was that direct financial management fees charged by the NSW Trustee were too high, and that clients could obtain cheaper services in the market if they had the choice. Some stakeholders suggested that NSW Trustee and Guardian should benchmark its fees to commercial providers. However, this is not possible as services are not sufficiently comparable.

Our data analysis of fees charged by the NSW Trustee in each of the past three financial years found that, on average, direct financial management clients paid approximately $1,900 per annum in total fees charged. Apart from the investment fee for the common fund, there are not equivalent services in the market against which to benchmark NSW Trustee fees.

Direct financial management clients do not have a choice in provider if there is no one other than the NSW Trustee willing or able to perform the financial management function when the court or tribunal is making an order, and if they cannot afford a private trustee company.

The NSW Civil and Administrative Tribunal has considered the higher fees charged for financial management services by private trustee companies compared to those charged by the NSW Trustee and Guardian. It has heard evidence that the higher fees enable private trustee companies to provide a more personalised service, including - in one example - a dedicated financial manager with whom clients can develop a one-on-one relationship and contact readily, and who conducts twice-annual visits to clients' homes.

IPART has also observed that ‘private trustee companies are also available to carry out comparable services on behalf of clients, but they generally only agree to act on behalf of higher net worth individuals.’

Key sector organisations argue that open market comparisons should be avoided because:

People under financial management do not choose to invest with (NSW Trustee and Guardian). They cannot choose other providers or walk away from their relationship with NSW Trustee and Guardian. Due to cognitive support needs, they are unlikely to be in a position to question or negotiate fees and investments. People under the Trustee's financial management are essential captive 'customers'…NSW Trustee and Guardian fees should always reflect the involuntary nature of the relationship…and the community service NSW Trustee and Guardian is intended to deliver. Low fees and strong returns should be the baseline of acceptable service delivery.

NSW Trustee and Guardian does not benchmark its direct financial management services fees against commercial providers. For the reasons set out above, the audit has not sought to do so either.

NSW Trustee financial management fees are comparable to those of public trustees in other Australian jurisdictions

NSW Trustee management fee amounts for direct financial management services are in line with the same type of fee charged by other public trustee offices around Australia. However, the basis for this fee type differs between jurisdictions.

The most significant fee for most NSW Trustee direct financial management clients is the annual management fee, set by the Regulation at 1.4% of the value of the estate, to a maximum of $15,000 per annum. This maximum fee amount is similar to the management fee caps applied in Queensland and Western Australia. As a proportion of the estate value, it is less than the equivalent fee in Victoria (3.3% for estates valued up to $500,000), South Australia (4.4%), Northern Territory (4.4% for estates valued between $0 and $200,000), the Australian Capital Territory (4.4% on the first $300,000 of the total) and Tasmania (4.5% on the first $200,000 of the total).

However, NSW Trustee is the only Australian public trustee to not charge this management fee on a sliding scale of different asset values. Further, most other Australian jurisdictions do not charge a one-off establishment fee for setting up the financial management account, nor an account keeping fee.

In our data analysis of the fees charged on 'chargeable assets' (that is not including the client's principal place of residence and assets for personal use such as a motor vehicle and furniture), we found that the:

• average estate value for direct financial management clients over the past three financial years was approximately $192,500
• average management fee charged per direct financial management client per annum was around $1,624.

NSW Trustee and Guardian has a published policy on waiving or reducing fees but does not monitor its application

Although NSW Trustee and Guardian has a policy on when client fees should be waived or reduced, it does not capture or review relevant data to understand how the policy is being applied in practice and what trends or common needs may be evident.

In IPART's 2008 review of the fees charged for financial management services by the agency that preceded the NSW Trustee - the Office of the Protective Commissioner (OPC) - IPART stated that financial management clients are, by their very nature, vulnerable members of society and that it was appropriate that serving them be supported by subsidy from the NSW Government.

IPART considered this view was reinforced by the fact that many clients had a limited capacity to pay for the financial management services they received. At that time, around 80-90% of the agency's direct financial management clients were eligible for Centrelink payments (based on income and assets tests). Of those that were not, a number had received compensation payouts (as a result of injuries from serious accidents) that were meant to cover their living expenses over their lifetime. One of IPART's key findings was that a client's capacity to pay should continue to be a key factor in determining the OPC's fees.

In our analysis of NSW Trustee and Guardian data, we found that in each year of the audit review period, overall, on average:

• 69% of NSW Trustee and Guardian's direct financial management clients were low-wealth clients and eligible for fee subsidies, with chargeable assets valued at $75,000 or under.
• a further 18% had chargeable assets valued at between $75,001 and $250,000, making them ineligible for NSW Trustee and Guardian fee subsidies or financial planning services for investments.
• 13% were 'high wealth' clients with chargeable assets valued at $250,001 or more.

The NSW Trustee and Guardian Act 2009 gives the NSW Trustee discretion to waive, remit or reduce fees payable under the legislation or regulations. As outlined in Appendix four, the NSW Trustee policies reduce the following fees for customers with assets valued at $75,000 and under:

• account keeping fee
• investment planning fees
• establishment fee for direct financial management clients.

The NSW Trustee also has a policy for waiving fees in cases of extreme hardship or inequity, and this is published on its website. The policy states that the correct fee should be charged as provided for in the Regulation and relevant NSW Trustee and Guardian policies, unless levying the fees would cause 'extreme hardship or would be inequitable'. Only delegated officers (at Director level) can decide to waive, remit or reduce fees and in doing so, they must consider the following factors:

• the size of the estate
• the client's needs
• the estate's commitments and liabilities
• whether payment of the fees can be deferred
• whether the estate could pay for the fees over time
• whether the estate can make a part payment
• whether the client would suffer any financial or other hardship in paying the fees
• the impact of any decision on NSW Trustee and Guardian's funding should it be applied to similar estates.

The NSW Trustee and Guardian policy states that fees should not be waived if there is any possibility of collecting them in part, in instalments or at a later date - for example, following the sale of a property - because 'to do otherwise would be to require unreasonable cross-subsidisation by other clients.'

A 2021 NSW Trustee and Guardian internal audit examined client fee waivers and reductions across all of the organisation's services for which a fee is charged. This identified the total value of fee waivers and reductions for direct and private financial management clients between FY2018 and FY2020 did not exceed $50,000 total in a year.

The internal audit did not find issues with the application of NSW Trustee and Guardian policy on fee waivers and reductions, and it considered that only moderate improvements were required. However, it also found that there was insufficient record keeping and monitoring of data to identify exceptions and trends in fee waivers and reductions across the organisation. This was similar to findings by IPART in its 2014 review of NSW Trustee and Guardian fees.

In 2022, NSW Trustee and Guardian commenced a project to better understand when it applies fee waivers to any of its services. It was not completed in time to be assessed through this audit.

Fees are waived in response to the limited ability of some clients to pay fees

We analysed NSW Trustee and Guardian's data on annual fees charged for direct financial management services over the period FY2020-FY2022, together with data on the value of the estates held by clients of these services for this time.

Our analysis found that in each of these financial years, of the approximately 12,400 direct financial management clients, between 1.3% (totalling around 160 people) and 2.7% (totalling around 330 people) were charged no fees.

NSW Trustee and Guardian reports on the total value of subsidies and fee reductions it provides to people with limited income and assets in its annual report. In 2021–22, these totalled more than $3 million for direct financial management services and approximately $125,000 for private financial management services.

We could not assess the number or proportion of direct financial management clients that have been charged a reduced or subsidised fee, and whether this is in line with NSW Trustee and Guardian policy. NSW Trustee and Guardian was unable to provide us with data relating to direct financial management clients who were charged a subsidised fee, or who had had a portion or all of their fee waived. This is because the relevant NSW Trustee and Guardian system did not distinguish between fee refunds and waivers until May 2022.

The direct financial management service fee is charged on the basis of estate value, not services rendered and a conflict of interest exists for uncapped fees

As detailed in Appendix four, the key fees charged for direct financial management services are based on a proportion of asset or investment value rather than on the work done to render the services, that is:

• a one-off fee charged when a person first becomes a client to identify and secure their assets (establishment fee): 1.0% of the value of the estate, subject to a minimum fee of $500, up to a maximum of $3,000, payable only once, with reductions for clients with chargeable assets valued $75,000 or less
• an annual fee charged for managing the estate (management fee): 1.4% of the value of the estate up to a maximum of $15,000 per year with no reductions for low-wealth clients
• a fee for managing an investment in a common fund, calculated at no more than 0.35% per annum of the value of the investment.

Other fees reflect specific services rendered where these are necessary for the management of the estate, and are charged on an estimate of time worked to complete the relevant output (for example, a financial plan) in hourly rates:

• a fee for preparing, managing and reviewing an investment plan
• fees for tax investigation and/or lodgement of tax return
• fees for inspection, valuation, or report on real estate; and/or for preparing specifications for repairs or renovations to real estate
• fees for conveyancing services relating to the sale or purchase of a property
• fees for legal advice provided or legal proceedings conducted in connection with an estate.

The Regulation caps some of these fees at certain amounts (see Appendix four). But the fees charged: for tax investigation or lodgement; for legal advice provided, or legal proceedings conducted, by the NSW Trustee in connection with the estate; and for any service or matter not specified in the Regulation (for example, conveyancing services), are not capped by the Regulation. Instead, the NSW Trustee may determine what are 'appropriate', or 'just and reasonable' fee amounts. The Regulation specifically allows legal services to be charged on a for-profit basis, like commercial lawyers.

Although standard practice in many industries, including for accounting and legal services, we have not seen evidence that NSW Trustee and Guardian makes or obtains an estimate of the time involved, and other options considered in fee-for-service items before undertaking the work required where this is provided 'in-house' by NSW Trustee and Guardian staff.

For example, separate legislation governing the conduct of legal professionals in New South Wales requires a law practice to provide clients with:

• information disclosing the basis on which legal costs will be calculated in their matter, and an estimate of the total legal costs, and
• any significant changes to these as the matter proceeds.

This includes taking all reasonable steps to be satisfied that the client has understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs before the work is undertaken.

Although the legal unit within NSW Trustee and Guardian may charge costs on a 'for-profit' basis, it is not a law practice and is not captured under these legislative provisions. The Law Society of New South Wales considers that the client for this legal unit's lawyers is NSW Trustee and Guardian as an agency, not the person whose affairs are being managed. This means any cost agreement is between NSW Trustee and Guardian and its own legal unit, although legal costs are paid from the estate of the person under management for whom the legal services relate.

Given NSW Trustee and Guardian is both the vendor of the services (where provided in-house, for example, legal services, financial planning, tax services) and the purchaser of those services (on behalf of the person whose affairs are being managed, as the financial manager) along with the agency resourcing challenges discussed in section 2.2, this creates a conflict of interest. This conflict is between NSW Trustee and Guardian's interest as a self-funded agency in generating fee revenue to help cover service costs, and its legal obligation to act in the best interests of financial management clients including through effectively managing their budgets and protecting the value of their estate.

In practice, NSW Trustee and Guardian manages this conflict of interest through segregating duties between different teams and staff delegations to require senior staff to make key decisions.

Frontline staff are also expected to consult the client on significant decisions, and provide reasons for decision to them, which include decisions relating to legal affairs. However guidance for frontline staff on referring client matters to other teams within NSW Trustee and Guardian that charge uncapped fees for services (such as the legal team and taxation services) does not specify whether, before the services are committed:

• an estimate of the likely time and costs involved should be obtained and compared to other providers
• the advice of an independent and/or expert party should be sought on, for example, the prospects of success (in legal action) or likely financial benefits
• information on likely costs and benefits should be included in the consideration of whether the services are in the client’s best interests.

In our analysis of NSW Trustee and Guardian data on direct financial management client assets and fees charged over the last three financial years, we found small numbers of clients each year who had been charged high legal fees (over $10,000) but had low chargeable asset balances.

NSW Trustee and Guardian does not regularly monitor its own performance in managing estates, outside of investments in the common fund

NSW Trustee and Guardian monitors the financial performance of the common fund, in which some direct financial management client funds are invested, including through measuring against relevant financial market benchmarks (see Appendix five). However, for other aspects of financial management, there is limited tracking to understand whether NSW Trustee and Guardian decisions and actions are financially sound and/or improving client outcomes.

Direct financial management services involves the NSW Trustee taking on responsibility for all aspects of a client's financial affairs that are covered by the relevant court or tribunal order, including:

• collecting income and benefits
• making payments to and from client accounts
• managing real property and leases including sale or purchase of a residence
• taking or defending legal proceedings
• managing financial planning and tax matters.

NSW Trustee and Guardian's relevant policies and procedures state that its fundamental responsibility is to ensure a client's affairs are managed in their best interests, including that funds are available to meet planned and unplanned expenses as they arise during the period of financial management. It defines sound management practice as ensuring that a financially responsible budget is prepared which '…provides sufficient cashflow that meets a [client's] expected annual expenses (plus contingencies) which are met from an income source such as a Centrelink pension, rental income or from realisation of financial assets or a combination [of these].'

NSW Trustee and Guardian currently undertakes an exception-based approach to monitoring whether staff actions and decisions in relation to managing estates (outside of the common fund) are sound. Where the client records system flags that an estate is possibly at risk of depletion because the rate of expenditure is over a threshold amount (five per cent per annum over the budget), the file may be referred to the financial planning unit and relevant actions to address the risk of depletion will be developed.

In 2021, an internal audit found that NSW Trustee’s depletion procedures did not provide guidance on how staff should identify or address depletion or how to escalate delayed actions. The internal audit suggested NSW Trustee and Guardian update relevant procedures to require depletion action plans be incorporated into annual client financial plan reviews so that the impact of depletion on the financial outlook of the estate is clearly documented. The 2021 internal audit also identified that some key aspects of good financial management were not covered by existing policies, procedures and guidelines for staff - namely: obtaining specialist support during decision-making; and identifying and addressing client/stakeholder conflicts of interest.

Current guidance on how staff should identify depletion is brief, and staff do not receive specific training on how to identify and manage depletion. Given there are many factors that can contribute to depletion, and budgets and files are only reviewed once a year or if the client notifies their financial manager of a significant change in their circumstances or expenditure, there is a risk that this exception-based approach to monitoring depletion may not be effective.

NSW Trustee and Guardian also does not routinely monitor changes in direct financial management client estate values that fall under the threshold that flags a risk of depletion. We analysed the data relating to chargeable asset values of clients who were not low-wealth (that is clients with initial chargeable asset values of over $75,000) as at 30 June 2022. This identified hundreds of clients whose chargeable asset values declined over the past five financial years, comprising:

• 314 clients with reductions in value of between 25% and 75%
• 113 clients with reductions in value of between 75% and 100%.

NSW Trustee and Guardian examined a sample of these at our request and advised the reductions were due to factors including changes in asset valuations and data on external balances (that is where assets are no longer under the control of NSW Trustee and Guardian) being retained in NSW Trustee and Guardian systems. While NSW Trustee and Guardian could investigate individual cases when raised with them, changes in estate values outside of the depletion risk threshold are not monitored at a systems level.

NSW Trustee and Guardian does not routinely monitor low account balances to understand whether budgets are unrealistic or overly restrictive

Most NSW Trustee and Guardian direct financial management clients have low-value assets, including cash in their trust accounts. For such clients, the primary role of the NSW Trustee is to manage their assets in a way that covers their accommodation and other living expenses over the term of the financial management order, taking account of their likely life expectancy.

Our analysis of NSW Trustee and Guardian data shows that 68% of direct financial management clients as at 30 June 2022 were low-wealth clients (that is with assets excluding the principal place of residence, motor vehicle, furniture and other assets for personal use valued less than $75,000).

Such clients would typically have 'simple budgets' classified by NSW Trustee and Guardian as follows:

• 'Pension in, Pension out' - where clients receive pension income only but may have available or accumulate some funds in their NSW Trustee and Guardian trust account through saving for holidays or other one-off expenses. Ongoing and expected one-off expenses are met from the pension income. Accumulated funds in the trust account may be used to meet unexpected one-off necessary expenses, if not deliberately saved by the client for specific one-off expenses.
• 'Some savings' - where clients receive pension income only and may have funds in term deposits or NSW Trustee and Guardian common funds (cash and fixed interest funds). Annual ongoing expenses are met from the pension income with funds available in cash and fixed interest funds to meet unexpected one-off expense needs.

Budgets developed by NSW Trustee and Guardian in consultation with the client estimate the expenditure and income over a set budget period (12/24/36 months), with any deficit met from the client's trust account balance or from the redemption of financial assets. If expenses cannot be met by income, NSW Trustee and Guardian staff will discuss potential options with clients in developing the annual budget, such as:

• reducing discretionary expenses
• reviewing any unnecessary ongoing expenses
• current care arrangements
• accommodation options
• prioritising expenses to meet available cash flow
• liquidating assets i.e. property.

A number of stakeholders we heard from through the audit (see Exhibit 8) relayed experiences of NSW Trustee and Guardian seeming to prioritise savings over covering all basic living expenses in budgets for low-income clients. This was perceived as 'starving' clients of their own funds in order to preserve some savings and maintain a financially sound budget.

There is no explicit requirement for financial management staff to achieve savings in client budgets. However, policies on addressing the risk of client estate depletion may have this effect in practice. Under the relevant policy and procedures, depletion is not considered to occur for simple budgets when expenses are met from Centrelink pension income; but if budget expenses exceed pension income, and investment earnings do not meet the budget deficit, the client's estate is deemed at risk of depletion.

NSW Trustee and Guardian guidance to staff on avoiding depletion risk for simple budgets is to limit the maximum annual expenditure to the value of the client's financial assets divided by their remaining life expectancy plus the annual Centrelink pension. For example, annual expenditure for a male client aged 60 years with cash and fixed interest investments of $80,000 would be calculated at $80,000/23.8 years = $3,361 per annum, plus pension.

Our analysis of NSW Trustee and Guardian data identified that 1,696 or 13% of the 12,556 direct financial management clients as at 30 June 2022 had a trust account balance of $5,000 or less at 3 August 2022. For these clients, the most typical characteristics were: aged between 51 and 70 years; living with psychiatric conditions; residing in a nursing home; NDIS eligible but not participating; and with NSW Trustee and Guardian for around six years on average.

The same data indicated that 96 or 0.8% of all direct financial management clients had estates that were deemed at risk of depletion or serious depletion at 3 August 2022. For these clients, the most typical characteristics were: aged between 36 and 50 years; living with brain injury; residing at home with family or by themselves; and with NSW Trustee and Guardian for almost 20 years on average.

This lack of monitoring raises the risk that NSW Trustee and Guardian may not identify and address direct financial management practices such as: creating budgets that do not meet basic living expenses; not identifying or managing risks of depletion; or failing to maintain client estate values.

Systems continue to prevent the adoption of fee-for-service charges for direct financial management, 15 years after this was first identified as a key issue

Another common concern expressed to the audit by consumers and external stakeholders was that financial management fees charged by the NSW Trustee did not seem to be connected to the services provided. This has been a longstanding concern of stakeholders relayed over many years, and IPART strongly agrees that a fee-for-service structure is preferable for direct financial management services. However, the client and accounting systems in place at NSW Trustee and Guardian do not capture the data required to enable such a fee structure, despite 15 years elapsing since this was first recommended.

In IPART's 2008 review of the agency that preceded the NSW Trustee in providing financial management services - the Office of the Protective Commissioner (OPC) - IPART found that the fees paid by clients were 'fundamentally disconnected' from the services they received, and from the cost of providing those services.

IPART's view was that a fee-for-service structure - with appropriate subsidies or rebates for those with diminished capacity to pay - would be fairer and promote greater efficiency in service provision by making costs transparent to OPC and clients.

But data limitations at that time frustrated attempts to fully identify and quantify the costs of the OPC's direct financial management services, among other things. The OPC client data did not sufficiently capture variability in client needs, and its workload data did not adequately capture the costs of providing financial management services. IPART recommended in 2008 that the relevant systems be upgraded as a matter of urgency.

NSW Trustee and Guardian was established in July 2009 through the merger of OPC and the Public Trustee NSW, when it also became administratively responsible for the Public Guardian. The NSW Government asked IPART to review NSW Trustee and Guardian's fees across all its services, including financial management, in 2014.

IPART advised in its 2014 report that stakeholders had again suggested a fee-for-service approach should be adopted, whereby fees reflect the actual services provided in an efficient and timely manner (for example, based on the frequency and complexity of services provided) rather than asset-based criteria (such as a fixed proportion of the chargeable asset value, as in the existing direct financial management fee). Stakeholders also suggested that the NSW Government should provide for those that cannot afford the necessary services.

In its 2014 review report, IPART stated that 'in an ideal situation', it would recommend fees that vary according to complexity/cost to serve, but could not do so as - like in relation to OPC in 2008 - the NSW Trustee and Guardian systems did not provide the data required to develop a fee structure on that basis.

NSW Trustee and Guardian had proposals to upgrade relevant systems but the relevant work had not been completed and while the quantity of transactions were being captured in the data, these did not indicate their complexity or the time taken by NSW Trustee and Guardian to attend to them. IPART recommended NSW Trustee and Guardian implement a planned revised costing system which would allow it to move to a more efficient and fair pricing structure in the future.

Over the five years in the audit review period (FY2018-FY2022), NSW Trustee and Guardian has undertaken or commissioned a number of analyses of the demand and costs associated with its financial management and guardianship services. However, as discussed in section 2.2 above, these have used estimates rather than data on actual costs incurred. Existing NSW Trustee and Guardian systems and data continue to inhibit the adoption of fees-for-service charges for financial management.

In contrast, private managers are generally not paid for providing private management services. Under an order of the Supreme Court of NSW, the NSW Trustee is able to allow private financial managers to be remunerated to a 'just and reasonable' amount from the client’s estate if the NSW Trustee is satisfied that:

• the private manager has duly performed the functions of a manager
• it is in the best interests, and for the benefit, of the client to do so.

What constitutes a 'just and reasonable' amount for remuneration is informed by reference to:

• market conditions such as competitive rates or fee scales published by independent, professional associations, moderated as necessary to be just and reasonable
• demonstration that fees actually charged are just and reasonable when measured against work actually done.

NSW Trustee and Guardian has statutory oversight of private financial managers

NSW Trustee and Guardian has statutory oversight of private financial managers and decides what powers they may exercise under the financial management order made by the court or tribunal, by issuing them with authorities and directions.

NCAT or the Supreme Court of NSW can make a financial management order that appoints either a private manager or the NSW Trustee to manage a person’s finances. Relevant legal cases have established that:

• Before appointing a private person as a financial manager, the court or tribunal needs to be satisfied that the person is willing to act and that they are suitable to be appointed.
• While the relevant legislation does not specify the criteria for suitability to be appointed as private manager, NCAT will normally consider the following elements in respect of someone nominated:
  • their character, honesty and ability to manage the estate in the client’s best interests
  • that they are of sufficient age and have sufficient experience in business, or in record-keeping and decision-making to be suitable
  • that they have no conflict of interest in acting as financial manager
  • there is no impediment to the nominated person being appointed, such as by reason of a criminal record or bankruptcy.

A private manager cannot interfere with a person’s estate unless Supreme Court directions have been obtained, or the NSW Trustee has authorised them to exercise financial management functions in respect of the estate.

NSW Trustee and Guardian issues a Directions and Authorities document to a private manager at the commencement of the financial management order. This document gives a private manager legal authority to act on behalf of the client, outlines the powers of the private manager appointed, details specific financial actions they will manage and the reporting to NSW Trustee and Guardian required each year. The issuing of the Directions and Authorities document is a reviewable decision, and a private manager can lodge an appeal for a review of this decision by NCAT.

Under the Directions and Authorities document, private managers can manage a range of day-to-day expenses such as:

• general living costs such as accommodation, care, and medical expenses
• costs associated with the client’s property such as taxes, insurance, gas, electricity, and repairs
• any items that will improve the client’s life (for example, a new wheelchair) if these items cost a reasonable amount in relation to the client’s finances
• fees for lawyers, accountants and other professionals, but not ongoing costs for legal proceedings
• maintenance and security of property and assets.

Private managers then have specific obligations to NSW Trustee and Guardian including:

• submitting a financial management plan to NSW Trustee and Guardian for authorisation at the beginning of the order which details all the client’s expected expenses, both ongoing and one-off (‘private manager’s plan’)
• lodging annual accounts of administration of the client’s financial affairs
• seeking approval from NSW Trustee and Guardian for expenditure other than day-to-day expenses.
• NSW Trustee and Guardian reviews the private manager’s plan, annual accounts and proposed expenditure outside of the private manager’s plan. It also conducts random file reviews identified through exception reports in the relevant client management IT system and concerns raised about the conduct of a private manager.

NSW Trustee and Guardian will step in if a private manager acts outside the powers outlined in the Directions and Authorities. Possible actions NSW Trustee and Guardian may take include:

• seeking a review of the private manager’s appointment at NCAT
• referring suspected or alleged elder abuse to the NSW Ageing and Disability Commission, or other relevant bodies
• referring suspected or alleged fraud to the NSW Police Force.

Private management is available in other states and territories by order of the relevant civil and administrative tribunal or the Supreme Court in the jurisdiction.

However, at the time of writing, New South Wales was the only Australian jurisdiction in which the public trustee authorises the person appointed by the court or tribunal to exercise their powers under the order. In every other state and territory, the civil and administrative tribunal usually does this.

In some jurisdictions, it is also the civil and administrative tribunal to which the private manager submits annual accounts. Accounts may then be checked by the tribunal, public trustee or other approved examiner, depending on the value of the person's assets and the jurisdiction. In New South Wales, the Australian Capital Territory, South Australia and Western Australia, the public trustee receives and checks these accounts.

NSW Trustee and Guardian is still the de facto decision maker for significant expenses proposed by private managers

Although the purpose of private management is for family members, friends or commercial operators to perform the role of financial manager, and NSW Trustee and Guardian policies require private managers to seek the approval of the agency before incurring certain costs. In effect, this means NSW Trustee and Guardian is the de facto decision maker for these expenses, including large expenses such as buying a motor vehicle or property.

Such expenses are those outside the private manager’s plan, such as:

• spending on relatives – including financial support to dependents
• donations to charity – if the client had regularly made donations, it may be reasonable to continue doing so
• reimbursement of reasonable private manager out-of-pocket expenses – if all family members agree and adequate records are kept
• any expenditure not included in NSW Trustee and Guardian’s ‘Directions and Authorities’ document such as buying a car or property.

To seek approval for these types of expenses, a private manager must submit a ‘change in estate’ form to NSW Trustee and Guardian that includes the client’s view (if possible), their family’s view and their available financial resources to support the request.

NSW Trustee and Guardian data we analysed showed that between February 2018 and September 2022, staff made a total of 10,541 'change in estate' decisions about private managers’ requests to use client funds outside of day-to day expenses. Almost all these requests (97%) were approved, approved in principle, or retrospectively approved.

Exhibit 18 below provides more detail on the top seven categories which accounted for most of the decisions made by NSW Trustee and Guardian in response to private manager requests over this period.

Exhibit 18: Top seven categories of NSW Trustee and Guardian decisions about private managers' requests to use client funds, by number, proportion of total and average days taken to make the decision,

Expense type	Number of NSWTG decisions made	% of total NSWTG decisions made	Average number of days taken for NSWTG decision
Investment changes	1574	14.9%	2.12
Real estate – sale of the client’s property	1435	13.6%	8.61
Residential accommodation bond	1213	11.5%	3.67
Miscellaneous request	1163	11.0%	1.65
Reimbursement of expenses	928	8.8%	3.89
Real estate – modifications / renovations up to $100,000	780	7.4%	2.87
Gifts	591	5.6%	6.6

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Other expense categories of these 'change in estate' decisions included: holidays, legal costs, motor vehicle purchases, past gratuitous care, other real estate activities such as leasing, and remuneration for the private manager.

In terms of the dollar values that these request decisions related to, the largest category concerned expenses valued between $0 - $1000 (comprising 18% of the 10,541 decisions made), followed by expenses valued between $300,000 - $500,000 (representing ten per cent of the 10,541 decisions made).

Although the legislative principles apply to private managers, these are not overseen by NSW Trustee and Guardian

Private managers are appointed as substitute decision-makers for the person under the financial management order. They must observe the same legislative principles in this role as NSW Trustee and Guardian must when it is appointed to make decisions for a person under a financial management order (see Exhibit 2). However, NSW Trustee and Guardian does not provide guidance to private managers, or its staff who work in the private financial management team, on how to apply the principles; and does not scrutinise whether the principles are observed by private managers in practice.

Although NSW Trustee and Guardian approval is required for a private manager’s plan for day-to-day expenses at the commencement of the order, for expenses outside of the plan, and on the annual statements of accounts, the agency does not assess, nor condition its approval on, evidence that the legislative principles have been considered and observed by the private manager.

The public handbook on private management that NSW Trustee and Guardian publishes and provides to private managers notes the obligation for private managers to act in the best interests of clients. This states that:

‘Any decisions about spending and investing the managed person’s money should be carefully considered. Decisions should be made with the aim of maximising the managed person’s quality of life within their financial constraints. The interests and views of the managed person come first. It is not the private manager’s role to preserve assets for the people who may eventually inherit their estate but to balance expenditure within the financial capacity of the estate… [R]egularly consult with the managed person about financial matters, if possible. It is also important to obtain and consider the views of the managed person’s immediate family, friends and other people closely involved in [their] life.’

There is no further guidance on applying the concept of best interests in practice – such as how to handle conflict between the client’s views and those of others in their life, or examples of what best interests or quality of life mean in practice. There is also no mention of the other six legislative principles.

Although the legislative principles are also reproduced in NSW Trustee and Guardian forms that private managers must complete, there is scant information about applying them in practice beyond statements that private managers should consult with the client and their stakeholders, and ensure that expenses benefit the client. While private managers must make a declaration with the annual accounts submitted to NSW Trustee and Guardian, this does not include reference to the legislative principles.

Nor do NSW Trustee and Guardian internal policies and procedures refer to the legislative principles in guidance for staff on how to review submitted forms or exercise NSW Trustee and Guardian's authority with respect to private management more broadly.

Private manager’s plans are expected to be assessed for completeness; there is no reference to any other factors that NSW Trustee and Guardian staff are expected to look for in considering whether or not to approve such plans.

Change in estate forms (seeking approval for expenses outside of the private manager’s plan) are expected to be assessed by NSW Trustee and Guardian staff considering:

• risks to the assets of the estate
• whether the private manager has sought appropriate family and other interested parties’ views, and that there is no conflict of interest in the proposal
• whether the private manager has satisfied themselves that the proposal meets the continuing needs of the client
• whether the private manager can demonstrate the proposal is affordable and does not put to risk the client’s lifestyle and welfare.

While these factors may yield relevant information, they do not emphasise the client’s best interests nor prioritise the views of the client; and do not provide advice or direction on how staff or private managers should consider and weigh each of the legislative principles in practice.

Annual accounts submitted by private managers to NSW Trustee and Guardian for review are classified as ‘first account’ and ‘subsequent account’ in following years. This determines the level of review NSW Trustee and Guardian staff are expected to apply (see Exhibit 19 below). Depending on the level of estimated risk, such reviews assess actual expenditure against the private manager’s plan (which, as noted, NSW Trustee and Guardian does not assess against the legislative principles). They do not add a check for adherence to the legislative principles.

NSW Trustee and Guardian reports that 90% of the accounts it reviewed during 2021–22 were passed on the basis they showed the person’s financial affairs were being managed appropriately.

Exhibit 19: NSW Trustee and Guardian's risk-based monitoring of annual accounts submitted by private managers

Risk level	Eligible accounts	Checked for	Passed if
Low risk	Subsequent accounts where: value of liquid assets is less than or equal to $200,000 the previous year’s accounts were passed.	Mandatory documents. Assets and liabilities are verified with provided documents Income and expenses are recorded as declared by the private manager, including any remuneration.	Automatically passed by auto-review in IT system if: variance in liquid assets for estates over $10,000 is less than 10% previous year’s accounts were passed otherwise passed if reviewer satisfied with supporting documentation provided no unauthorised transaction (for example, sale or purchase of an asset without authority) no unexplained depletion of estate.
Medium risk	First accounts. Subsequent accounts where: value of liquid assets is more than $200,000, and the previous year’s accounts were passed.	As above, and income and expenses checked to determine if they are reasonable.	Otherwise passed if reviewer satisfied with supporting documentation provided and: income and expenses are reasonable no unauthorised transaction (for example, sale or purchase of an asset without authority) no unexplained depletion of estate.
High risk	Subsequent accounts where previous year’s accounts were not passed. Any accounts ‘flagged for review’ by NSW Trustee and Guardian staff. Any accounts requested for review as part of NCAT hearings or as determined by the NSW Trustee and Guardian staff.	As above, in more detail for example, That all remuneration, major expenses and changes in estate were approved by NSW Trustee and Guardian. Income and expenditure checked against bank statements.	Otherwise passed if reviewer satisfied with supporting documentation provided and: income and expenditure reconciled against bank statements no unauthorised transaction (for example, sale or purchase of an asset without authority) no unexplained depletion of estate.

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For NSW Trustee and Guardian to assess whether a private manager’s plan, proposed expense outside of the plan, and annual accounts are in the best interests of a client, and to determine which of the other six principles should apply to individual decisions, staff need information about the client. For example, staff need information about the client's situation and context to know what 'freedom', 'self-reliance', 'normal' and 'preserving relationships' might look like for the client in practice. Critically, such information would also assist staff in assessing the risk of a client experiencing neglect, abuse and exploitation.

However, key information about the client is not usually available to staff oversighting private managers. For example, we found in our analysis of NSW Trustee and Guardian data relating to private management services that many fields were blank or unknown, including the client's age, gender, address, language spoken, Aboriginal and Torres Strait Islander status, disability and NDIS status.

NSW Trustee and Guardian rarely interacts with the client whose financial affairs are being managed by a private manager and does not consult with the client or their family members directly to verify the information on their views provided by the private manager.

NSW Trustee and Guardian may arrange for an independent ‘authorised visitor’– such as a social worker, doctor or occupational therapist – to visit the client and report to NSW Trustee and Guardian on the person’s needs. The authorised visitor may also provide the private manager with recommendations on how the client’s money should be spent to address any unmet needs and to enhance the person’s quality of life. However, NSW Trustee and Guardian’s use of authorised visitors is very low: just 29 visits were arranged in 2020, and seven in 2021 (it is not clear how many were for private management clients as compared to direct financial management clients). The use of authorised visitors also imposes a cost on the client as fees for authorised visitor’s travel and report are paid by their estate.

Private managers must seek approval from NSW Trustee and Guardian to give the client the authority to independently manage part of their estate if it is not allowed by the financial management order. Being granted 'section 71 authority' (see Exhibit 10) may assist the client to develop their own decision-making capacity and demonstrate to the relevant court or tribunal that the financial management order ought to be revoked. It is a key mechanism by which the legislative principle to encourage client self-reliance may be given some effect.

NSW Trustee and Guardian’s file review checklist for private management oversight staff seeks to capture whether a section 71 authority has been granted, but it is not clear that NSW Trustee and Guardian has monitored this at a central level to understand the extent to which private managers are aware of this opportunity, and whether they are willing and able to give it effect in practice. The new Independence and Support Team established under the 2022 operating models will seek to increase section 71 authorities granted for both direct financial management and private management clients in the future.

The latest performance measures NSW Trustee and Guardian has adopted for its private management function track frontline staff caseloads, the timeliness of private manager plans submitted for review, timeframes for its staff reviewing expense requests, and whether clients, family and carers report an improved experience. They do not monitor adherence to the legislative principles.

NSW Trustee and Guardian has reviewed its private management services for efficiency and customer service, but has not yet implemented all recommendations

Although private financial management services have not been internally reviewed as often and as extensively as direct financial management services, NSW Trustee and Guardian has looked at the private management operating model and customer experiences for improvement opportunities.

The agency's implementation of accepted recommendations from these reviews has not been timely and a number remain outstanding.

An internal review of the private management function that NSW Trustee and Guardian conducted in 2016–17 sought to implement a new operating model that would reduce the costs to serve, eliminate a backlog of matters and increase client satisfaction.

The internal review mapped the work procedures and suggested that a significant amount of total staff time was spent in reviewing, querying and approving significant transactions or investments and annual accounts submitted by private managers. This time was exacerbated by IT system limitations and manual entries. The review recommended NSW Trustee and Guardian adopt process improvements including:

• issuing standard initial Directions and Authorities documents
• creating a self-service portal for private managers with supporting online resources like 'how to' videos
• standardising the private manager's plan
• enabling automatic approval for specific one-off expenditures in the NSW Trustee and Guardian IT system
• removing the (then) requirement for private managers to lodge investment proposals for NSW Trustee and Guardian approval
• streamlining the proposals still to be submitted online (for expenditures that cannot be automatically approved)
• taking a risk-based approach for annual account reviews based on variance reporting
• streamlining non-compliance procedures for example, through automated reminder notices for private managers and system flags for staff.

A 2017 initiative aimed at improving the private manager experience identified common issues then including:

• insufficient information about private manager’s responsibilities and NSW Trustee and Guardian’s role
• issues with communication – a preference for face-to-face engagement and information in diverse community languages
• cumbersome processes
• delays in responses from NSW Trustee and Guardian staff
• inconsistency of advice provided by NSW Trustee and Guardian.

In response, NSW Trustee and Guardian developed factsheets for people applying to NCAT to appoint a private financial manager, and planned for improvements to the ‘customer journey’ for private managers through the 2022 operating models. The implementation status of other recommendations is not clear.

A 2020 internal audit on record keeping also identified that NSW Trustee and Guardian’s private management files, along with direct financial management files, had not been accurately, completely and consistently kept. It also found the IT system used for private management was not compliant with government requirements for official records management systems. NSW Trustee and Guardian has plans to integrate an appropriate records or information management system into its public guardian and private management client management IT system to comply with government record-keeping requirements by 2023–24, but at the time of the audit this was not yet in place.

Customer service principles are in place, but consumers are not asked to provide feedback on whether they are being met

The legislation and standards do not specify a benchmark for service quality. To provide consumers with information about what they can expect from NSW Trustee and Guardian’s services, organisation-wide ‘customer excellence principles’ were introduced in September 2018. Before these principles were introduced, NSW Trustee and Guardian did not have clear service quality objectives for financial management or guardianship services.

The customer excellence principles state that consumers should:

• receive expert, clear, and helpful advice informed by best practice
• be treated with respect and courtesy. Their feelings are acknowledged and considered
• receive individualised service tailored to their needs
• receive efficient advice and service at a place and time convenient for them
• be confident that they receive good value – service is effective, efficient, and appropriate for their needs
• be highly satisfied with the service they receive.

Although feedback from clients is fundamental to understanding whether staff are implementing the customer excellence principles in practice, and delivering direct financial management and guardianship services effectively, NSW Trustee and Guardian does not ask direct financial management and/or guardianship clients or their stakeholders for such feedback.

Customer satisfaction surveys are not offered to most financial management and guardianship service clients and stakeholders

NSW Trustee and Guardian commissions an external party to annually survey its clients and stakeholders across the services for which fees are charged, including direct and private financial management services. People under guardianship orders and their stakeholders are not surveyed. The reason for excluding guardianship clients from these surveys is unclear. NSW Trustee and Guardian advises that work commenced in 2022 to try to include people under guardianship orders and their stakeholders in these surveys.

The annual survey on financial management services is administered to around 200 direct financial management clients and their stakeholders, and 200 private managers. This comprises about one per cent of the total number of direct financial management clients and three per cent of the total number of people with private managers, as at 30 June 2022.

Survey respondents are not stratified by their type of disability or reason for decision-making incapacity, cultural identity, accommodation type, location, or other characteristics. The survey is conducted over the phone in English, excluding people who are: non-verbal, do not speak English, do not have access to a phone and/or have low digital literacy. The firm conducting the surveys are not trained in engaging with people with disability.

This may mean there is under-representation from some cohorts of clients who cannot engage with the survey in the way it is offered.

Survey results indicate increased satisfaction over time, as well as areas for improvement

Noting these limitations, survey results indicate that, overall, direct financial management clients and stakeholder satisfaction scores increased from 61% in 2017 to 76% in 2022. Private manager overall satisfaction scores increased from 67% in 2017 to 80% in 2022.

Respondents have also consistently identified the following areas of customer service as needing improvement:

• the understanding of my situation shown by staff
• ease in contacting the right team when I need them
• the knowledge staff have about my inquiry when I contact them
• the opportunity for consultation where a major decision has to be made.

A 2021 review of NSW Trustee and Guardian's customer research found that the way survey results are shared internally does not encourage staff engagement with the results, and that client feedback has not been used to develop action plans to improve practice and services for many years.

Interactions with customers are not regularly monitored to ensure good customer service practices

Aside from the annual survey discussed in the previous subsections, and ad hoc consultations on key matters – such as proposed changes to NSW Trustee and Guardian fees held in 2021 – there is little proactive engagement with financial management and/or guardianship clients or their stakeholders to seek feedback on service delivery.

Direct financial management and guardianship services are mostly provided to clients over the phone or by emails and letters. Incoming calls to financial management staff are recorded, but they are not regularly reviewed to ensure that good customer service practices are being applied by staff to their interactions with consumers.

During our consultations with managers, we were told that they randomly select one call a month to provide feedback to frontline staff in their team during monthly performance reviews. Outgoing calls made by direct financial management frontline staff to clients are not recorded or monitored, and the Public Guardian does not record or monitor any calls made to or by frontline staff. There is also no evidence that emails are regularly monitored or reviewed by direct financial management or guardianship senior managers.

In 2021, direct financial management call monitoring processes were reviewed, and a new program was developed in response to track the quality of staff engagement with consumers. This program also intended to provide feedback to staff to drive service quality improvement. However, an internal review of the program found that:

• it did not lead to any measurable improvement in the quality of interactions between staff and clients
• it was not aligned with the NSW Trustee and Guardian customer excellence principles or general best practice
• there was no quality management software, specialist staff or call handling training in place.

Staff feedback on the program indicated that they felt demotivated by it. Many frontline staff do not have previous experience in managing high call volumes, in using call de-escalation techniques when interactions become challenging, or in building relationships over the phone. Staff also indicated they were concerned that they did not have the skills to effectively engage with people with brain injuries, intellectual disabilities, and mental ill health.

Call monitoring was suspended in 2022 to allow staff to focus on implementing the new operating model, and to account for higher levels of unplanned leave due to COVID, colds and flus. NSW Trustee and Guardian advises that it is reviewing its processes to re-commence call monitoring in mid-2023, and is exploring other types of monitoring systems.

Given the limited avenues and efforts to seek feedback from guardianship and financial management clients discussed in section 3.1, complaints provide NSW Trustee and Guardian with its main source of information about consumer experiences of these services.

Over the five-year audit review period (FY2018-FY2022), NSW Trustee and Guardian received the following number of complaints about its financial management and guardianship services:

• direct financial management services received 1,007 complaints in total, with complaints increasing from 177 in FY2018 to 237 in FY2022
• private financial management services received 71 in total, with complaints slightly decreasing from 18 complaints in FY2018 to 15 in FY2022
• Guardianship services received 402 in total, with complaints slightly increasing from 76 complaints in FY2018 to 78 in FY2022.

Most of these complaints were classified as 'unsubstantiated' by NSW Trustee and Guardian. NSW Trustee and Guardian considers complaints to be 'substantiated' when there is evidence that staff have made an error and/or taken actions that are not in line with policies, procedures, and its customer excellence principles.

For each of NSW Trustee and Guardian's services, the number of substantiated complaints in 2021–22 were as follows:

• 86 of the 237 complaints (approximately 36%) about direct financial management services were substantiated
• 2 of the 15 complaints (approximately 13%) about private financial management services were substantiated
• 10 of the 78 complaints (approximately 13%) about guardianship services were substantiated.

NSW Trustee and Guardian could capture more types of complaints to increase the amount of feedback it receives on its financial management and guardianship services

Complaints received and resolved directly by frontline staff are considered informal and are not counted, monitored, and analysed by NSW Trustee and Guardian. As a result, NSW Trustee and Guardian may miss important information about systemic and recurring causes of complaints, and the needs and experiences of clients under financial management and guardianship orders.

Feedback on how complaints are handled by staff is also not sought from complainants. Such feedback would increase NSW Trustee and Guardian's ability to check that frontline staff respond to and resolve complaints appropriately, and help to identify any issues with how staff handle complaints.

Complaints handling processes are mostly in line with the NSW Ombudsman guidelines, but processes and training to ensure complaints are appropriately escalated by frontline staff could be improved

NSW Trustee and Guardian's approach to handling complaints is in line with the NSW Ombudsman’s relevant guidance for government agencies.

Frontline staff are expected to attempt to resolve any complaints (which includes any expression of dissatisfaction) that they receive, as soon as possible. Unresolved complaints are formally escalated to senior managers for investigation and can then be further escalated for internal review by NSW Trustee and Guardian's complaints handling teams, or external review (for example, by the NSW Ombudsman). Complaints can be escalated for internal or external review at the request of complainants or NSW Trustee and Guardian staff.

NSW Trustee and Guardian's complaints handling teams are independent of the frontline staff teams. Their responsibility is to ensure complaints are appropriately investigated and that there is evidence to support the outcome of the complaint (that is, whether it is substantiated or not).

While NSW Trustee and Guardian's complaints handling teams are appropriately independent and escalation processes are clear, there is no review process to ensure that complaints that are directly resolved by frontline staff have been effectively handled in line with NSW Trustee and Guardian's policies, procedures, and customer excellence principles. Without information on how frontline staff resolve complaints (and decide that escalation is not necessary), NSW Trustee and Guardian cannot assess how often, consistently and appropriately complaints are addressed by frontline staff. This lack of information and oversight also does not allow for good customer service practices to be identified and shared between staff.

More attention needs to be placed on making complaints processes accessible to all clients and stakeholders

NSW Trustee and Guardian does not review or ask for feedback on its complaints processes to ensure that they are accessible to all clients and stakeholders. It also does not provide specific training to frontline staff to help them identify and assist clients with disabilities and/or cognitive support needs to make a complaint.

NSW Trustee and Guardian requires formal complaints to be submitted in writing – either by email, letter, or the online form on its public website. Frontline staff are expected to write down complaints for people when they request support either over the phone or in person. The National Relay Service can be used to communicate complaints from people who have a hearing impairment, and the Translating and Interpreting Service can be used to translate complaints from people whose first language is not English.

NSW Trustee and Guardian advises that one-to-one support is informally provided to staff to help them understand complaints handling processes and to appropriately respond to complaints.

However, there is no specific training or guidance for staff on how they should identify when a client may require assistance to make a complaint. Staff are not trained to identify an issue or situation that might constitute a complaint in substance even if the word ‘complaint’ is not used. They are also not trained or provided with procedures on supporting people with intellectual disabilities, brain injuries, mental ill health, and other conditions that may affect decision-making or other cognitive capacities to make a complaint. Without this specific training, staff may lack the appropriate skills to identify and record complaints from clients under financial management and guardianship orders.

Over the five-year audit review period, most of complaints about financial management and guardianship services came from stakeholders such as family members and advocates rather than from clients under orders. Our analysis of NSW Trustee and Guardian's data found that over the five-year audit review period approximately:

• 26% of complaints came from direct financial management clients
• 3% of complaints came from clients under private management orders, with 55% from private managers
• 6% of complaints came from guardianship clients.

NSW Trustee and Guardian advises that this is probably because, by definition, people under orders have limited decision-making capacity. While most clients under financial management and guardianship orders may require assistance to make a complaint, NSW Trustee and Guardian does not regularly monitor or analyse its complaints data to determine if complaints come from people with different cultural identities, locations, or disabilities.

This type of analysis would help NSW Trustee and Guardian determine if there are any barriers that may prevent particular groups of clients and stakeholders from making complaints. It would also help staff to identify and assist any clients who may need additional support to access NSW Trustee and Guardian's complaints processes or otherwise provide feedback.

External stakeholders we spoke with emphasised the importance of inviting and encouraging feedback from people under financial and guardianship orders in multiple ways that are accessible to them. We have not seen evidence that NSW Trustee and Guardian consults external stakeholders or clients to understand how to improve the accessibility of its feedback and complaint processes.

Complaints data is not consistently used to drive service quality improvements

The NSW Ombudsman's whole-of-government 'Complaints Handling Improvement Program' (CHIP) recommends that NSW Government agencies regularly review their complaints data to understand consumer experiences and improve systemic issues with agency service delivery.

NSW Trustee and Guardian’s dedicated complaints handling teams' count and categorise formal complaints into the following key themes: communication, timeliness, decisions made, costs, policy and procedure, and other. During the audit review period, most complaints received by NSW Trustee and Guardian's financial management and guardianship services were about communication, timeliness and decisions made. The number of complaints in each key category, division, and outcome is reported quarterly to the executive leadership team.

However, in 2021, an internal review of NSW Trustee and Guardian's direct financial management services found that:

• complaints about direct financial management services are analysed to understand why individual incidents occurred, but lessons are not identified and applied to other complaint situations in a consistent, client-focused way
• complaints are not effectively monitored to ensure relevant recommendations are implemented and that relationships between staff and complainants are repaired
• complaints are not analysed to determine why a significantly lower number of complaints from clients are upheld (that is, substantiated) compared to those made by family members and others.

Complaints received in relation to NSW Trustee and Guardian guardianship services were not included in this review.

In 2022, NSW Trustee and Guardian began trialling a new complaints feedback mechanism which included improving data collection on complaint themes and identifying their root causes to allow complaints data to inform on executive level strategic and operational decisions for its direct financial management services. This process also aimed to increase consistency between teams, and support frontline staff to learn from any issues with their practice that individual complaints may highlight. The audit could not assess the impact of this feedback mechanism on complaints data analysis as it had only recently been implemented at the time of writing. NSW Trustee and Guardian advises that a similar complaints feedback process is also being used to analyse and learn from complaints about guardianship services.

Complaints performance measures do not provide sufficient information about service quality

In 2021, NSW Trustee and Guardian introduced a customer-centric key performance indicator that aims to use complaints data to inform on service quality, but the measures identified to track progress are limited by the complaints data that existing systems can capture.

Prior to 2021, reports to the executive leadership team included complaint numbers and themes, and performance measures that focused on reducing complaint numbers. Performance measures that focus on reducing complaints may indicate that some people are unable to make a complaint due to barriers or other factors, rather than that services have improved.

To focus on improved service quality rather than on reducing overall complaint numbers, NSW Trustee and Guardian introduced a new key performance indicator in 2021. This indicator is focused on delivering good outcomes to clients by responding to complaints in a timely manner, and following through on staff commitments to resolve issues. The performance measures identified to track progress against this indicator include responding to complaints within target timeframes and maintaining the average number of substantiated complaints over a 3-month period. While these are relevant measures, they do not provide information on common issues and causes of complaints. They also do not rely on feedback from complainants to measure whether staff commitments to resolve issues were met.

NSW Trustee and Guardian advised that its performance measures have recently been updated to identify any increases in substantiated complaints caused by communication issues. If an increase is detected, it is expected to be further investigated to determine if there are any systemic issues. These systemic issues should then be communicated to relevant senior staff members (but are not consistently included in the reports to the executive leadership team).

It is important that NSW Trustee and Guardian tracks and formally reports on any systemic issues identified from analysing complaints data to ensure that they are used to drive service quality improvements. NSW Trustee and Guardian advised that existing key performance measures will be further updated as insights and data from implementing improved complaints feedback processes are gained.

Monitoring of unacceptable behaviour management needs to be improved

NSW Trustee and Guardian has unreasonable complainant policies and procedures that are in line with the NSW Ombudsman’s guidelines for managing unreasonable conduct from complainants.

Unreasonable conduct is defined by the NSW Ombudsman as ‘any behaviour by a person which, because of its nature and frequency, raises substantial health, safety, resource and equity issues for the people involved in the complaint process.’ In 2020-2021, the NSW Ombudsman delivered training on how to identify and appropriately manage unreasonable complainant conduct to NSW Trustee and Guardian staff.

NSW Trustee and Guardian introduced a register in 2021 to record and monitor restrictions it had put in place for people classified as unreasonable complainants. Unreasonable complainants may, for example, be restricted to contacting NSW Trustee and Guardian staff once a week by email only. Currently, there are less than five people on the register. This is in line with NSW Trustee and Guardian's procedures that state that these restrictions should only be used as a last resort, after warnings and other strategies have been tried by staff.

There is no equivalent register that monitors the actions implemented in response to people who have not made a formal complaint, but whose behaviour is being managed by NSW Trustee and Guardian staff according to a separate ‘Unacceptable Client Behaviour Policy.’ Staff are expected to record and document unacceptable client behaviour and restrictions in the client management systems, but NSW Trustee and Guardian could not provide the audit with data on how many people have unreasonable behaviour restrictions placed on them across the organisation.

NSW Trustee and Guardian monitors impacts of the changing environment and advocates for systemic change on behalf of people under financial management and guardianship orders

NSW Trustee and Guardian commits resourcing to monitoring the environment and conducting systemic advocacy. It has external relations, customer advocacy and stakeholder engagement teams that are responsible for:

• providing information and educating the public about guardianship
• supporting frontline staff to manage issues that affect direct financial management and guardianship clients such as problems with assisted boarding houses, closures or sanctions placed on aged care and disability facilities, and the NDIS
• engaging with external stakeholders – such as the NSW Ageing and Disability Commissioner, NSW Health and the National Disability Insurance Agency – on disability and age-related issues to inform decision-making for direct financial management and guardianship clients
• coordinating involvement in policy reform initiatives where these are relevant to NSW Trustee and Guardian functions (such as the 2018 NSW Law Reform Commission inquiry into the Guardianship Act).

We have seen recent evidence of NSW Trustee and Guardian leading or being a key contributor to systemic advocacy efforts, such as:

• liaising with Services Australia on behalf of public trustee offices around Australia regarding inefficient processes, unclear escalation avenues, and declining responsiveness from Centrelink on matters concerning people under financial management and guardianship orders
• collaborating with the Australian Government agency AUSTRAC to see legal and process amendments to ‘know your customer’ rules that financial institutions must adhere to, which currently do not accept public trustee identification on behalf of financial clients
• contributing to national policy reform roundtables on supported decision-making for people under guardianship orders convened by the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability.

The 2022 operating models also include a dedicated role in the divisions delivering financial management and guardianship services with responsibility to build awareness of these functions amongst NCAT members and the public, and to improve relevant processes between NCAT and NSW Trustee and Guardian.

The Department of Communities and Justice holds policy and advisory responsibility with respect to NSW Trustee and Guardian's enabling legislation, and receives the latter's advice about how the legislation is operating in practice. The Department considers that NSW Trustee and Guardian appropriately identifies and escalates issues for it to address through policy development or legislative amendment.

NSW Trustee and Guardian adjusts its service delivery in response to performance information and the external environment, but this tends to be a reactive process

We have seen evidence that NSW Trustee and Guardian responds to changes in the external environment by reviewing and adjusting the way it delivers its financial management and guardianship services. For example:

• In 2020, gaps in and quality issues with direct financial management services were internally reviewed following critical media and discussions with the Attorney General. This informed the development of a new operating model as part of a subsequent budget bid for additional funding in 2020–21.
• A significant complaint made to the NSW Ombudsman led to a 2021 internal review of NSW Trustee and Guardian’s policy and practice response to the risk of depleted estates for direct financial management clients.
• To develop budget bids and new operating models for financial management and guardianship services, NSW Trustee and Guardian evaluated external changes impacting its service delivery, such as: demand, clients’ needs, increasing matter complexity, available support services, community expectations and other environmental changes.

However, this tends to be a reactive process in response to pressures in the external environment. We have not seen evidence of NSW Trustee and Guardian reviewing its performance information in an ongoing way to understand whether changes made are effectively addressing the issues it was were targeting.

NSW Trustee and Guardian has explored what supported decision-making might look like in practice

Although the existing legislation in New South Wales makes it a substitute decision-making jurisdiction, NSW Trustee and Guardian has explored what supported decision-making (see Exhibit 20) might look like in practice if it was pursued by the NSW Government in response to changing community expectations.

Exhibit 20: Supported decision-making

Supported decision-making refers to processes and approaches that assist a person to make their own decisions. This approach to decision-making seeks to allow a person to exercise their autonomy by giving effect to their will and preferences. Putting supported decision-making into practice includes observing certain principles and taking certain steps: Principles: the right to make decisions support to make decisions giving effect to will, preferences, and rights ensuring safeguard mechanisms Steps: knowing the person identifying and describing the decision understanding the person’s will and preference for the decision refining the decision and taking account of constraints considering if a formal process is needed reaching the decision and associated decisions implementing the decision and seeking advocates if necessary. There has been a longstanding legal and community push for Australian guardianship and administration systems to move from substitute to supported decision-making, accelerated by the United Nations Convention on the Rights of Persons with Disabilities which Australia ratified (with exceptions for guardianship and financial management functions) in 2008. The Australian Law Reform Commission in 2014, and the NSW Law Reform Commission in 2018, each recommended that a formal framework for supported decision-making and (as a last resort) substituted decision-making be adopted, but relevant governments have not accepted or acted on these recommendations. The current Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability (Disability Royal Commission) is again exploring the potential for related reform across Australia. It has heard evidence, and observed, that a shift to greater opportunities for supported decision-making is a critical step towards giving effect to the human rights of people with disabilities. A Research Report prepared by La Trobe University for the Disability Royal Commission has noted that adequate resources are required to implement all elements of an assisted decision-making framework. Similarly, the evidence of the Victorian Public Advocate noted that increased resources are required to make decisions that give effect to a person’s will and preferences and to implement a supported decision-making model in practice.

Between January 2016 and June 2017, NSW Trustee and Guardian conducted a supported decision-making project with 33 direct financial management clients and their chosen supporters to help them make decisions about their financial affairs. This project was funded by the then Department of Family and Community Services. NSW Trustee and Guardian subsequently commissioned the University of NSW to evaluate the project. Although the project was not progressed past the pilot phase, the evaluation of the project found that:

• financially managed participants required ongoing support, facilitation, and advocacy to help them make decisions. This support could be provided as part of NDIS packages or advocacy services
• readily available financial literacy training delivered in accessible formats to people with disability was possible and important. Training for support persons to assist participants to make their own decisions is also necessary for managing conflicts of interest and effectively implementing supported decision-making processes
• NSW Trustee and Guardian's existing processes could incorporate more supported decision-making principles into its substitute decision-making framework, and provide more opportunities for clients to build their financial skills to manage parts of their estate.

Supported decision-making was further explored by NSW Trustee and Guardian in November 2019 in response to the May 2018 NSW Law Reform Commission inquiry into the Guardianship Act 1987. The NSW Law Reform Commission found that the focus on substitute decision-making in the Guardianship Act was outdated in the current social, legal and policy environments and “no longer fit for purpose.” It recommended significant reforms to the Act including:

• new principles for substitute decision-making, including that a person’s ‘will and preferences’ should be given effect wherever possible
• formal recognition of supported decision-making, including support agreements and the power for NCAT to make a Support Order
• periodic reviews of financial management orders by NCAT.

NSW Trustee and Guardian estimated the effort and costs involved in implementing the recommended reforms to the Guardianship Act. It considered that the proposed principles to give effect to the person’s will and preferences wherever possible would significantly increase the amount of time staff would need to spend obtaining and understanding the client and client views. For example, under the proposed principles and legislative framework, NSW Trustee and Guardian estimated that on average, for each client:

• developing an annual budget would increase from 0.8 to 8 hours
• making significant financial decisions would increase from 1.5 to 5.5 hours
• completing annual guardianship visits would increase from 1 to 3 hours
• making significant guardianship decisions would increase from 4 to 12 hours.

The NSW Government has not yet responded to the recommendations of the NSW Law Reform Commission's Guardianship Review.