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Power of attorney system ‘in desperate need of improvement’

Written by: Emma Lunn
Research by Which? found widespread confusion about how the process works, with banks often causing ‘avoidable problems’ for people registering as attorneys.

Lasting Power of Attorney (LPA) is a legal document where one person gives another the power to make financial decisions on their behalf if they ever lose mental capacity.

But Which? was concerned to find that many people have a poor understanding of how LPA works and why it is needed.

The consumer champion found that nearly nine in 10 (85%) people said they knew what LPA is, but there were ‘worrying gaps’ in their knowledge.

One in six (16%) mistakenly thought that an individual loses access to their financial accounts once the legal document is registered. This might explain why only one in seven (15%) said they would give someone else power of attorney over their affairs.

An LPA can only be registered while an individual still has mental capacity – after that it is too late. But Which? found ‘concerning evidence’ that many people don’t know this.

Among those surveyed who do not have an LPA, seven in 10 (70%) said they were healthy so did not need one. Meanwhile, three quarters (77%) of people incorrectly thought an LPA can be set up at any time in life, suggesting they are at risk of putting it off.

Which?’s research has consistently found over the years that attorneys encounter problems when registering with banks and other financial firms.

In a separate survey, it found that the common issues reported for more than 8,000 of its members with a registered LPA were a lack of knowledge among staff (60%), complexities in the process (38%) and delays (28%).

Most people (31%) who registered LPAs said banks were the most difficult to deal with. Many said banks lost LPA documents, failed to properly explain the registration process or required them to make unnecessary trips to a branch.

Which? heard from people who were asked to register in-branch in the middle of the Covid-19 pandemic, even at banks where online registration was an option.

Even once the registration process has been completed, some banks don’t authorise full access to the donor’s accounts.

For example, Nationwide doesn’t let attorneys use telephone or app banking services, while Tesco Bank does not give attorneys access to online banking. With HSBC, attorneys only have access to online banking if the donor does not. Other banks allow both the attorney and donor to have access.

Which? is urging for consistent industry standards and modernisation in terms of the access granted to accounts as well as the registration process. It also wants the Office of the Public Guardian (OPG) to work harder to improve awareness of and access to LPAs.

Jenny Ross, editor of Which? Money, said: “People who take on the responsibility of helping a family member or friend to deal with their financial affairs should not have to jump through hoops when dealing with banks, but our research reveals many are still facing an uphill struggle to put the legal arrangement in place.

“The creaking power of attorney system needs urgent improvement, particularly to address the public’s lack of awareness of how the process works and the difficulties people face when registering with banks. This problem has been going on for years.

“Government proposals to modernise LPAs – such as introducing a fast-tracking service, digitising the registration process and improving awareness – are much needed to make the system fit for purpose in the 21st century.”

Emily Deane, technical counsel at the Society of Trust and Estate Practitioners (STEP), said: “We are urging the Ministry of Justice to increase resources immediately to counter these registration issues and a ‘fast-track’ procedure and channel should be established to deal with urgent matters.

“We are calling on the OPG to do more to end the emotional, financial and physical abuse of older or vulnerable people, and protect them from controlling or coercive behaviour. The government also needs to focus on educating and informing the public about LPAs and why they are so important.”

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