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16 Feb 2022

Power of attorney system in desperate need of improvement, Which? warns

Our research finds widespread confusion about how the process works and banks often causing avoidable problems for people registering as attorneys

Many people don't understand how the power of attorney system works and can face an uphill battle trying to put the vital arrangement in place, new Which? research has found.

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.

Despite the peace of mind it can bring, only one in seven (15%) people have given someone else power of attorney over their affairs, according to our survey of 2,000 people in November 2021. Our research suggests that a lack of awareness and an outdated, difficult-to-navigate system are to blame.

Here, we reveal common misunderstandings and explain why proposals outlined in the government consultation on modernising LPAs - such as introducing a fast-tracking service and digitising parts of the registration process- are crucial to make the system fit for purpose in the 21st century.

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Confusion over how power of attorney works

In our survey, nearly nine in 10 (85%) said they knew what an LPA was. But we found worrying gaps in their knowledge. For example, one in six (16%) mistakenly thought that an individual loses access to their financial accounts once the legal document is registered.

We also found misconceptions around when an LPA can be registered. You can only grant power of attorney to someone while you still have mental capacity - after that it is too late.

But 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 could be set up at any time in life, suggesting they are at risk of putting it off.

Awareness of LPAs appears to be especially low among certain groups. Young people and those on lower incomes all showed lower levels of understanding of LPAs.

A quarter (26%) of people aged 18 to 34 and one in five (20%) who earn under £21,000 a year said they did not know what power of attorney was, compared to just seven per cent of those aged over 55 and one in 10 (10%) of those who earn over £56,000.

Banks letting attorneys down

Over the years, our research has consistently found that attorneys encounter problems when registering with banks and other financial firms.

In a separate survey, Which? 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.

Even once the registration process has been completed, some banks do not authorise full access to the donor's accounts. Nationwide does not let attorneys use telephone or app banking services, for example, 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.

'HSBC stopped communicating with me'

We 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.

These include Adam, who was asked by HSBC to go into a branch in August 2020 to register his LPA as he didn't have all of his mother's account details needed to complete the online form.

'This was at the height of the pandemic, before vaccines were available,' he told us. 'As someone with health conditions of my own, and as a carer for other vulnerable adults, I didn't want to take the risk.'

When Adam did manage to retrieve the account details and submit the online form, he received no word that his LPA had been registered, leading him to believe the bank had ignored it. But HSBC told us that Adam's LPA had been added to its credit card system in March 2021, and it wasn't part of its process to send out confirmation. This contradicts communication Adam received from the bank saying he would get confirmation.

By failing to acknowledge LPAs, banks can cause attorneys a huge amount of stress, and potentially plunge them deeper into financial trouble. Adam needed the LPA registered with HSBC so he could discuss writing off his mother's debt, or at least moving her on to a different payment plan. In its failure to communicate with him, HSBC prevented Adam from resolving this.

HSBC said: 'We're sorry to hear the issues this customer has had trying to register an LPA for his mother and have offered the customer a gesture of goodwill payment by way of apology.'

Reform desperately needed

The consumer champion is urging for consistent industry standards and modernisation in terms of the access granted to accounts as well as the registration process. Which? also wants the Office of the Public Guardian - the government agency responsible for setting up powers of attorney - to work harder to improve awareness of and access to LPAs. Our research highlights why their proposals to make the system faster, safer and more accessible urgently need to be acted upon.

Jenny Ross, Which? Money Editor, 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.