Opinion: Lasting Power of Attorney system needs fixing urgently

Too few people understand how Lasting Power of Attorney works, including the banks and building societies loved ones will have to deal with.

Dementia is a growing issue in the UK.

According to the Alzheimer’s Society, there are currently around 900,000 people with dementia across the country, and it’s on course to hit 1.4 million by 2040.

The condition can cause enormous stress for families, not least because of the difficulty in handling the finances and care of a loved one who no longer has mental capacity.

One useful tool to protect against that is Lasting Power of Attorney, yet there is no doubt that the system around these agreements is in dire need of improvement.

What is Lasting Power of Attorney?

First off, it’s worth highlighting what Lasting Power of Attorney is and why it can prove so useful.

With Lasting Power of Attorney, you appoint an attorney ‒ which could be a family member or friend ‒ to make decisions on your behalf should you lose mental capacity or develop an illness that might make you stop making decisions for yourself.

These arrangements come in a couple of different forms ‒ one covering property and financial affairs, the other covering health and welfare.

The person setting up the arrangement ‒ known as the donor ‒ needs to have the mental capacity to put it in place, while they can also choose more than one attorney. 

A lack of understanding

One of the issues around Lasting Power of Attorney is the lack of understanding around precisely how they work.

A new study by Which? found that while most people think they know what Lasting Power of Attorney is (85%), in truth, there are some worrying gaps in their understanding.

For example, a sixth (16%) believe that once the document is registered, the person loses access to their financial accounts. 

Almost three quarters (70%) said that because they were healthy they had no need to arrange a Lasting Power of Attorney, while even more people (77%) said that such arrangements could be set up at any time in life.

This is a big mistake ‒ a Lasting Power of Attorney can only be registered while an individual still has mental capacity. If you leave it until after the issues have really developed, then it will be too late.

Understanding of Lasting Power of Attorney was particularly low in certain groups, such as the young or those on lower incomes.

For example, one in four (26%) of those aged 18 to 34 did not know what Lasting Power of Attorney was, as did one in five people earning less than £21,000.

Compare that to just 7% of those over 55 and 10% of those earning above £56,000.

Undoubtedly, if we are to ensure that Lasting Power of Attorney is utilised properly, addressing some of those damaging misconceptions ‒ and quickly ‒ is of crucial importance.

Inconsistent approach

Another big concern centres on the way that financial firms end up dealing with the attorneys, particularly the scale of the inconsistencies.

Another Which? study, this time of people that have registered a Lasting Power of Attorney, found that almost two-thirds (60%) reported a lack of knowledge about the agreements with the staff they dealt with. 

And it was banks that were identified by a third (31%) as being the hardest to deal with, in some cases losing documents, failing to explain the registration process or forcing them to make unnecessary trips to branches.

These even happened in the midst of the pandemic, which is truly barking mad.

Which? gave some examples of the variable way that banks and building societies handle Lasting Power of Attorney.

At Nationwide, for example, attorneys cannot use telephone or app banking services, while Tesco won’t let attorneys use online banking. At HSBC attorneys can only have access to online banking if the donor doesn’t. 

My own Lasting Power of Attorney experience

Unfortunately, Lasting Power of Attorney has been something of a regular presence in the life of my family in recent years.

As my grandparents got older and developed health issues, my parents were granted Lasting Power of Attorney to handle their finances.

I know first-hand that the way different banks handled that process was incredibly variable, which in itself only caused further hurt.

I now have Lasting Power of Attorney, along with my brother, for my father who has had his own health problems and while it does provide some peace of mind, that relief is tempered somewhat by the knowledge that we don’t really know how his various banks will deal with any requests we make.

The fact that what we will be able to do with Dad’s accounts, should the time come when we need to take an active role, will vary based on who he has decided to have an account with is absolutely crackers.

The Office of the Public Guardian ‒ which is who Lasting Power of Attorney agreements are registered with ‒ has consulted on modernising their setup, which is a useful start but let’s be clear, they need to go much further.

We need proper oversight of how firms work with attorneys so that there are consistent standards, and people know exactly how they are going to be treated. 

Having a loved one unable to make decisions for themselves is upsetting enough; having to jump through unnecessary hoops to make those decisions for them, simply because there isn’t a consistent system in place, only makes that worse.

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