The report by the Australian Human Rights Commission has called for nationally consistent laws governing power-of-attorney among states and territories.
Findings from the report, released on Tuesday, also revealed a large number of people did not understand the responsibilities or rights of the power-of-attorney, which the commission said exacerbated the potential for abuse.
Age discrimination commissioner Robert Fitzgerald said unity among power-of-attorney laws would grant greater protections and make it easier for people to understand.
"National consistency in legislation is the first step to both reducing confusion and creating a national approach that fills the knowledge gaps," he said.
"All Australians, regardless of age or ability, have the right to live with dignity, security, autonomy and control over their lives and wellbeing.
Power-of-attorney is where someone appoints another person, such as a relative, to act on their behalf in making important financial or legal decisions.
It is often used in the case of a person being unable to carry out decisions in the future due to illness or cognitive decline.
The report, which surveyed 3000 people, found just one-quarter of people acting as a decision-maker for someone fully knew the responsibilities involved.
It also showed more than one-third of people had granted a power-of-attorney to someone who showed characteristics identified as risk factors for elder abuse.
"An enduring power-of-attorney is a critical option to give people that control, but most Australians know very little about it," Mr Fitzgerald said.
"If people do not understand their rights and responsibilities, it can drive misuse and abuse, severely hurting the people this legal document is meant to protect."
The report also called for a national register be established for people who have a power-of-attorney in place, as well as a sustained community awareness campaign.
"Two decades of inaction in Australia is long enough, the time to act is now," Mr Fitzgerald said.
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