A power of attorney can give clients comfort that those they trust will be able to look after their welfare and financial affairs if they are no longer able to do so.
However, those with a power of attorney in place may be, or may become, vulnerable and unfortunately this can make them a target for fraudsters.
In fact, there are several factors to consider when dealing with powers of attorney; here we’ve identified six we think are worth keeping in mind.
1. Setting up a power of attorney
Anyone can potentially grant a power of attorney (as long as they have mental capacity to do so). This person is usually referred to as the donor or granter.
The attorney is the person (or persons) given the authority to act on their behalf.
An attorney must be aged 18 or over (16 or over in Scotland) and will not be able to act as attorney in respect of property and finance matters if they have been declared, or become, bankrupt.
2. Requirements can differ across the UK
Power of attorney documents and terminology differs between each of the four countries in the UK.
For instance, in Scotland there is a continuing power of attorney, which is to be used for money and/or property. In England and Wales this would be a type of lasting power of attorney with property and financial affairs selected. In Northern Ireland power of attorney can only be given for decisions relating to property and financial affairs, and not for welfare decisions, which would be made by your next of kin.
A power of attorney given in one of the four UK countries can be used in another if an organisation accepts its authority, but not all do. At Nucleus we accept power of attorney documents from all four countries and will review the documents on a case-by-case basis.
3. Powers of attorney can be set up for different purposes
Power of attorney can be granted for health and welfare or property and financial affairs.
Within the power of attorney document this can be broken down further with authority split by joint for some decisions (e.g. property) and jointly and severally for others (e.g. financial affairs). We need to understand what authority has been given so that we can ensure that decisions are being made in the client’s best interest and in line with their wishes.
At Nucleus we only accept a power of attorney where it explicitly states that responsibility is given for financial affairs. An attorney for health and welfare affairs would not be able to make any decisions regarding a client’s Nucleus account.
4. There are different types of misuse and abuse
Attorneys don’t always act in the best interests of the donor. If the attorney fails to pay bills or make decisions that cause financial harm or loss to the donor this would be considered a type of financial abuse.
We know that people living with dementia, clinical depression or reduced cognitive function face the highest risk of having their power of attorney abused. Coupled with the increased risk of giving authority and access to their financial affairs to another person, vulnerable clients are at an increased risk of misuse or abuse from their attorneys.
Typically, an attorney is known to the donor meaning there could potentially be a conflict with their own financial decisions. If the attorney makes a decision which they themselves would personally benefit from, it could be deemed a conflict of interest. Any sudden or unexplainable changes to the clients account could be a cause for concern.
5. You can report your concerns
There's always a level of risk when giving authority over your financial affairs to someone else. Attorneys have a legal duty to act in the best interests of the person who appointed them (the donor). However, there’s no central body who checks that attorneys are in fact acting in the best interests of the donor. If you do have a concern about a power of attorney you can highlight to one of the appropriate bodies listed below.
If you’re in England or Wales and you have concerns about a registered attorney, deputy or guardian you can get in touch with the Office of the Public Guardian. In Scotland if you have concerns about the actions of a financial guardian or withdrawer you can contact either the guardianship or access to funds teams at the Office of the Public Guardian (Scotland). In Northern Ireland you can raise concerns to the Office of Care and Protection.
6. How we look after Nucleus clients with a power of attorney in place
We regularly review our processes relating to powers of attorney. This is to ensure that everything from record keeping to security questions and vulnerable client notifications are captured. We conduct deep dive reviews of our processes to ensure that they are up-to-date and provide the right level of controls based on the level of risk presented.
Where there is a power of attorney we want to ensure that we have the right controls to identify the attorney and help them access the information they need to be able to make the best possible decisions for the client.
Please don't hesitate to contact us if you have any questions on this.
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