NSW Trustee & Guardian

THE NSW Trustee & Guardian allows so-called 'private managers' to manage the affairs of some of its clients. These private managers are usually close relatives of the NSW Trustee & Guardian clients. For example, a parent might manage the affairs of an adult child with an intellectual disability.


This works to the advantage of both the NSW Trustee & Guardian and its client. The NSW Trustee & Guardian does not have to appoint a public servant to manage the client's affairs, while the close relative of the client is likely to have a deeper emotional commitment to the client.


But there's always the risk that a private manager breaks the rules or even defrauds the NSW Trustee & Guardian.


This is why the NSW Trustee & Guardian recently started up its Surety Bond Scheme. This is an insurance scheme to protect NSW Trustee & Guardian clients against fraud by their private managers.


There are a number of concerns.


First, the fee is set at a level where it will, over time, consume a significant proportion of assets under management.


Second, as the purpose of the insurance is to protect NSW Trustee & Guardian clients against being defrauded by their private manager, clients whose private managers have unblemished records are paying the same premium as clients who have managers with higher risk profiles.


Third, private managers are appointed by either the Supreme Court or the NSW Civil & Administrative Tribunal, taking into account a number of eligibility criteria to ensure appointments are appropriate. The annual premiums for asset values in excess of $50,000 are set at a significant 0.4 per cent. This gives rise to the question whether appointments of private managers are made prudently by public managers. Should insurance be a financial burden on the person with a disability whose assets are being managed, or would it not be better if the risk of fraud would be reduced by tightening the appointment process. To give the NSW Trustee & Guardian some skin in the game, should the NSW Trustee & Guardian not be bearing the cost of insurance.


The new bond surety scheme seems to lump the person with a disability whose assets are under management with yet another cost of their disability. It seems that through the surety bond scheme the NSW Trustee & Guardian is delegating both responsibility and cost for managing the maladministration risk to the person manifestly unable to manage it: the person with a disability.