Ask Jenny Ross: Why do people with power of attorney face so many pitfalls?

Question: What advice would you give those trying to deal with an elderly relative’s finances via a power of attorney? The banks and other institutions vary in their competence with these, and they are almost never quick and easy to use.

Power of attorney can be a lifeline if you need someone else to make an important financial decision on your behalf
Power of attorney can be a lifeline if you need someone else to make an important financial decision on your behalf

Answer: People who take on the responsibility of helping a friend or relative manage their finances should not have to jump through hoops when dealing with banks on their behalf, but unfortunately Which? research backs up your experience – over the years we’ve repeatedly found that many attorneys encounter difficulties when trying to register and use their powers with financial firms.

The legal arrangement can be a lifeline if you fall ill and need someone else to make an important financial decision on your behalf, or if you can no longer manage day-to-day finances on your own, but there are plenty of misunderstandings about how it works.

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Crucially, a continuing power of attorney in Scotland can only be registered while someone still has capacity. But in a recent survey, Which? found that 77 per cent of people incorrectly thought a power of attorney could be set up at any time in life, suggesting they’re at risk of putting it off until it is too late.

The first step in registering a CPA is to submit your forms to the Office of the Public Guardian. After that, your attorney(s) will need to register their powers with your bank and any other financial firms. This involves supplying the power of attorney document (original or certified), along with proof of the attorney’s identity and address.

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It’s not always as straightforward as it sounds. Common issues reported in Which?’s November 2021 survey of more than 8,000 people with a registered power of attorney included a lack of knowledge among staff (60 per cent), complexities in the process (38 per cent) and delays (28 per cent).

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Many told us that banks lost documents, failed to properly explain the registration process or required them to make unnecessary trips to a branch – including during the pandemic.

The lack of standardisation among banks was also a source of frustration, with some attorneys calling for a system where a power of attorney is registered once and recognised across all institutions.

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Even once the power of attorney is registered, there’s no guarantee a bank will give you full access to the donor’s accounts. Nationwide doesn’t let attorneys use telephone or mobile app banking services, for example, while Tesco Bank doesn’t give attorneys access to online banking. With HSBC, attorneys only have access to online banking if the donor doesn’t.

Most banks set out their process for dealing with power of attorney on their websites. It’s worth taking a look at this so you know what to expect, and can challenge any conflicting information you might be given by individual members of staff over the phone or in branch. It’s also a good idea to keep a record of your correspondence in case you later decide to make a complaint.

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You should complain to the bank itself in the first instance, but can escalate to the Financial Ombudsman Service if you’re unable to reach a resolution. When assessing complaints about power of attorney, the FOS says it checks that the business ‘has treated the customer in a sensitive and sympathetic way.’

UK Finance, the banking trade association, says the industry is working with the Ministry of Justice on its proposals to ensure the process is as efficient as possible. Changes to modernise and streamline the system are badly needed, but until these take effect it seems attorneys should be prepared for frustrations when dealing with banks.

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Jenny is the editor of Which? Money

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