case studies
powers of attorney on
bank accounts
 52/4
banking – power of attorney – firm insists on registration of power despite medical evidence that donor is not lacking mental capacity
Mrs H arranged for her son to have an enduring power of attorney so he could help manage her affairs. About a year later, after she had decided to move into a nursing home, the son called in at the firm’s local branch. He wanted to make arrangements to operate his mother’s account for her once she had moved. When he mentioned that she was becoming a bit forgetful, the firm said he would have to register the power of attorney before it could act on it.
Mr H felt this was unnecessary. He sent the firm written evidence from his mother’s doctor that although she was suffering from early Alzheimer’s dementia, which affected her short-term memory, she was not mentally incapable.
However, the firm remained adamant that it could not act on the power of attorney until it had been registered.
Eventually, Mr H and his mother concluded that they would have to obtain legal assistance. It was only after their solicitor intervened that the firm agreed there was no need to register the power of attorney. After complaining direct to the firm about its handling of the matter, Mr H came to us.
complaint upheld
We accept that situations of this sort can often place firms in a difficult position. They want to protect their customers, but equally they do not want to inconvenience them.
In this case, we felt the firm had no real grounds for believing Mrs H to be mentally incapable. Even after receiving unequivocal medical evidence that she did not lack mental capacity, it persisted in saying her son had to register the power of attorney before it could act on it.
We felt it had been reasonable, in the circumstances, for Mrs H and her son to get legal help in order to resolve the situation. So we told the firm it should meet their legal costs and pay Mrs H some compensation for the inconvenience it had caused.
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52/5
banking – power of attorney – firm’s systems limit way in which donor and attorneys can operate account
Shortly before he took on a temporary assignment abroad, Mr J appointed his parents to act as his joint attorneys. He assumed the power of attorney would automatically enable his parents to operate his current account. However, the firm told him the situation was not quite so straightforward.
It said its internal procedures meant that attorneys could only operate a donor’s account if they had first been added as parties to that account. And as the firm’s systems did not allow more
than two parties to a joint account,
it would not be possible to add both
Mr J’s parents.
Mr J’s father thought the firm was being unreasonable. He said the power of attorney should enable him and his wife to operate their son’s account, without the need for any further ‘formalities’. So he refused to complete the forms enabling the firm to add him as a party to his son’s account. The firm refused to change its stance, so Mr J came to us.
complaint rejected
The impasse seemed to us to be most unsatisfactory for all concerned. However, the firm had made its position entirely clear at the outset. We did not feel we could fairly make it put special arrangements in place to accommodate Mr J and his parents. The firm had offered him £250 as a gesture of goodwill and we encouraged him to accept this.
52/6
banking – whether special circumstances allow firm to release money to customer’s relative who does not have power of attorney
Mr D had learning difficulties and was unable to manage his own financial affairs. He held a joint bank account with his father. He also received several state benefits which were paid to his cousin, Miss E, under an informal arrangement with social services.
When his father died, Mr D became solely entitled to the money held in
the joint account – about £400. But, because he lacked sufficient mental capacity,
he could not withdraw it or authorise anyone else to do so on his behalf. Miss E asked the firm if it would release the money to her, so she could give it to Mr D. The firm refused because she had no power of attorney.
complaint resolved informally
Miss E could have asked the Court
of Protection to appoint her as a receiver to deal with Mr D’s affairs.
But the costs of doing so would have been disproportionate – more than
the £400 in the account.
We could not say that the firm’s
stance was wrong in law. But it agreed with us that (given the relatively modest amount at stake, and that
Miss E was entrusted with Mr D’s benefit payments) it would be appropriate in this particular case for
it to release the money to Miss E.
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