Bank errors over power of attorney add to the pain

HIGH street banks have been accused of causing unnecessary distress for customers by botching power of attorney requests and leaving them unable to manage their finances.

Complaints about the way that banks handle power of attorney (POA) are on the rise as more families suffer delays due to incompetence and poor administration.

A POA is a legal authority given by one person (the donor) to one or more individuals allowing them to handle the donor’s financial or legal affairs. They are typically given where the donor is elderly, has lost their mental capacity or is vulnerable in some way and unable to make their own financial decisions.

In Scotland there are two types of POA – continuing and welfare. The former gives the nominated individual the power to act either straight away or from a set day. This primarily covers financial and property affairs, while the welfare POA relates to decisions about health and personal welfare.

The number of POAs registered by the Office of Public Guardianship Scotland leapt by 10 per cent to almost 43,000 between 2010 and 2013.

But banks and building societies too often fail to understand what a power of attorney is and how it works, according to the Financial Ombudsman Service (FOS), which warned that delays were causing families unnecessary distress.

The ombudsman, which mediates in complaints between consumers and financial firms, receives around 35 complaints every month from people unhappy with bank handling on POA. Those complaints are typically highly sensitive and often involve family disputes. In many cases the bank has simply refused to accept a POA. Documents are frequently lost and delays are caused by poor administration, while there have been instances of financial firms making mistakes when registering the document on their systems, according to the FOS. There are also numerous cases where firms have wrongly insisted on the original POA document and refused to accept a certified copy.

Calls for banks and building societies to improve staff training on POAs appear to have fallen on deaf ears, with the FOS warning that many branch staff still don’t understand what a POA does or means.

That remains the case despite the British Bankers’ Association and the Building Societies Association publishing guidelines a year ago setting out member responsibilities to families.

“The ombudsman receives too many cases where banks are failing to understand the different types of POA or how a delay in processing them does have a significant impact on their customers,” said a spokesman for the FOS.

“It’s vital that financial businesses take the time to fully train their staff to understand how a POA works as the impact of getting it wrong can have a devastating effect on people already struggling to manage a very distressing situation.”

One Scottish law firm has reported a marked increase over the past 18 months in the number of clients encountering difficulties when establishing POA with banks.

“We have been involved in cases where banks have taken many months to process POA, which can cause very significant problems,” said Alan Innes, partner at Pagan Osborne.

“For instance, if a person has lost capacity and is moving into care then their care fees cannot be paid until the attorney is granted, causing a considerable delay before the home receives funds. A lot of time can be spent chasing the banks which can have a stressful and unsettling effect on those involved.”

There are instances in which banks are right to deliberate over POA requests, such as where it believes the attorney may be abusing their power. But many of the problems experienced by families arise from administration errors and poor understanding of POA rights, said Innes.

“Better understanding is crucial and we would urge organisations to review their training and processes regarding POA documents in light of these issues,” he said.

For more information:www.bba.org.uk/publication/