There is medication which may help. Unfortunately, this is not always as effective in dementia as it is with othe rmental health issues that cause hallucinations, basically because dementia is caused by ongoing and progressive organic damage to the brain, whereas other conditions are often caused by chemical imbalances which can be corrected.
The medication may reduce or eliminate the hallucinations, as well as reducing the anxiety associated with them.
One of the difficulties in dementia is distinguishing between hallucinations and delusions/confabulations. The former means actually seeing or hearing unreal things - the latter is a belief or false memory of having done so. If your mum points at empty chairs and says there are people in them, that is a hallucination. If she claims she has seen people in the house then it could be a delusion or a memory of a hallucination.
Whilst these problems are common in dementia, it is not acceptable to have them dismissed - sometimes such things do not bother the patient but they more often do and then it is time for a medical intervention.
Ongoing treatment for someone with dementia is usually carried out by a consultant (such as a dementia specialist or geriatric pyschiatrist) - it is a specialised area not normally dealt with by a GP although they of course remain the primary contact.
I would go back to the GP and explain about the distress that is being caused and for a referral to a consultant. If no help is forthcoming, ask for a second opinion - at GP level you can simply ask for one without giving reasons.
