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ombudsman news

issue 124

March/April 2015

powers of attorney

Complaints involving powers of attorney are among the most distressing that we see each year. This is understandable - as the inevitably stressful process of escalating a complaint comes at a time when people are often already dealing with the upset of losing - or seeing someone else lose - their mental capacity.

Recognising the importance of minimising the impact of mistakes and complaints - by putting things right fairly and quickly - we recently published practical tips for businesses’ frontline staff, as well as for customers. We also updated our online technical resource with an overview of our approach to complaints involving powers of attorney.

Our own information complements guidelines and resources from official bodies like the Office of the Public Guardian, financial services regulators and trade associations, and independent experts on issues faced by older people.

In this ombudsman focus, we share the perspectives of some of these organisations and experts - on the challenges that powers of attorney present to financial businesses and their customers.

image: Jane Vass
Jane Vass
Head of Public Policy, Age UK

The decision to seek a power of attorney reflects or anticipates a difficult situation in the life of the person concerned and their circle of immediate family and friends. Loss of mental and/or physical capacity is distressing for the affected person and for those close to them. It may also exacerbate other problems such as shortage of money, cost of care and strained relationships.

Frequently the decision to seek a power of attorney is preceded by a period of informal assistance with banking and paying bills, including the use of the affected person’s bank card and PIN, which breaches their contract with their bank and voids protection from loss.

Calls to Age UK’s information and advice service suggest there can be practical difficulties in using powers of attorney because of the need to formally identify the parties involved, which often means making visits to banks and service providers with photo identification. “The new company took a lot of trouble to accept that I was who I said I was,” said one participant at an Age UK workshop.

The difficulties arise from the inherent complexity of the situation or from shortcomings in organisational procedure and/or staff training. Organisations are generally better at doing things they do all the time - but can stumble when a staff member is carrying out a procedure they haven’t used before or have used only rarely.

Some of the challenges raised with Age UK arise from the fact that the dependent person has already lost significant mental capacity, so it may be too late to set up a power of attorney. Instead, carers may need to go the Court of Protection - a more costly procedure - for a deputy to be appointed (different rules apply in Scotland).

So Age UK advises that it’s better to have a lasting power of attorney in place. While banks and service providers will already have procedures in place to support people who are no longer able to manage their own money, our evidence shows that customer experience is very variable.

Ongoing work is needed to ensure that all staff and branches are made aware of the legal rights attaching to powers of attorney and have a consistent system for helping customers use them - including procedures that take account of the practical challenges faced by carers and dependents when trying to comply with systems of identification and verification.

Service providers also need to make sure they have a clear system for recording powers of attorney so that customers and their attorneys aren’t inconvenienced in subsequent transactions.

image: graeme Whippy
Graeme Whippy

Disability consultant at the Business Disability Forum and Lloyds Banking Group representative on the Prime Minister’s Dementia Friendly Communities Champion Group

I think historically, there’s been a perception that banks are being obstructive when they deal with customers with dementia and other forms of mental incapacity. But it’s not as straightforward as that - it’s a two-way thing. Financial businesses have to work within the law and given rules in order to minimise risk both to themselves and their customers. And for their part, customers have an important responsibility to put in place mechanisms for managing their affairs if and when they’re no longer able to.

I’ve definitely seen a shift in perceptions and awareness over the last two to three years, where collaboration between financial services and key organisations - like the Office of the Public Guardian and Alzheimer’s Society - has made good progress in communicating to customers the need to plan for the future. So customers are becoming increasingly aware of the significance of powers of attorney.

But there’s still work to do to dispel the myths and fears that exist. For example, we need to put to rest people’s worries that powers of attorney are a last irrevocable step in losing control over your finances - and promote the idea that they’re a powerful tool for managing your affairs in a safe way.

One big remaining challenge I see is the process of setting up a power of attorney - which I know some people find cumbersome, time-consuming and expensive. The mechanics of setting it up should be made much easier.

And although it would take time to integrate individual systems, financial businesses could work together to create a universal registration form. That way, customers wouldn’t have to repeatedly fill out nearly identical information for each business - when they’ve already gone through the bureaucracy of getting the power of attorney in the first place.

In my role as a Dementia Friends Champion - and working within financial services - I’ve seen initiatives that really make a difference for customers. For example, “walk out working” models allow customers to register and use powers of attorney with that particular business within an hour of visiting a branch.

It’s also important to integrate dementia awareness into mandatory refresher and induction training for frontline staff. And local branches can play an active part in dementia-friendly communities - for example, by supporting local Dementia Action Alliances.

Baroness Sally Greengross OBE
Crossbench peer, chair of the all-party parliamentary group on dementia, and Chief Executive of International Longevity Centre UK

Complaints about powers of attorney - whether they involve lost documents, administration or misunderstandings - can be very upsetting. But with the support of the Financial Ombudsman’s guidance, these could be resolved quickly.

However, some issues with lasting powers of attorney (LPAs) are more worrying. Recently a Select Committee of Parliament conducted a review of the working of the Mental Capacity Act 2005. Having read the report, I have a concern about the way the existence of an “advance decision”, in the form of an LPA, is recorded and communicated.

As the report reminds us, advance decisions are an essential means of allowing people to determine their care in the event that they lose capacity. If such decisions aren’t recorded and shared with relevant bodies, they are likely to be ineffective.

The report contains ample evidence of poor understanding among consumers, businesses and health and care staff - and this needs to be addressed. The report recommends the promotion of early engagement between businesses, health and care staff and patients about advance decisions.

The Committee found similarly poor levels of understanding of LPAs among professional groups. They recommended that the government, working with a new independent oversight body and the Office of the Public Guardian, consider how best to ensure that information concerning registered LPAs can be shared. The Committee also recommended that the government consider how attorneys and deputies faced with non-compliance by public bodies or private companies can be supported.

There are currently 800,000 people with dementia in the UK, and with an ageing population there will be more instances where attorneys who live and work away from the donor’s home will be required to discuss options with public and private bodies by phone and email. It must be feasible for bodies such the NHS to have a central repository for LPAs so any NHS trust can access the records to ascertain the validity of attorneys.

The position with private businesses, including financial businesses, may be even more challenging. But if an individual, having thought the matter through, has decided to give someone they trust the legal authority to make decisions on their behalf, then the least they can expect is that such wishes will be acknowledged, recorded and respected.

Gavin Terry
Gavin Terry

Policy manager, Alzheimer’s Society

Following the launch of the Prime Minister’s Challenge on Dementia in 2012, Alzheimer’s Society has been leading a group looking at the way personal information and data is used by and for people with dementia.

According to a poll we carried out among people with dementia, their carers and their family and friends, only 22% feel that businesses and organisations understand people’s rights around lasting powers of attorney.

There are times when families or friends may need to access or share information on behalf of a person with dementia. The law in this area can be complex and often people are prevented from doing this due to the Data Protection Act. We want people to feel confident and empowered with the right knowledge to exercise their rights.

That’s why we’ve collaborated with Office of the Public Guardian and various organisations to create a booklet about accessing and sharing information. Our aim is that it will act as a catalyst for more dementia friendly policies across service industries - not least financial services.

As Martin Lewis pointed out when we launched our booklet, any difficulties the people caring for us might have in getting access to our cash - even possibly to pay for treatment - compound the other more obvious issues around losing mental capacity.

We’d encourage customers with questions or concerns about dementia or powers of attorney to read our guidance - or to phone our free helpline on 0300 222 1122.

image: Martin Wheatley
Martin Wheatley

chief executive, Financial Conduct Authority (FCA)

We recently published a paper on the treatment of consumers in vulnerable circumstances. We want to spark a vital conversation that financial businesses, regulators and consumers need to have. One in eight people in the UK act as a carer, the number of dementia patients is due to double over the next 40 years and someone is diagnosed with cancer every two minutes. We should also note that vulnerability is not binary - it is not simply a permanent classification. Some become vulnerable at various points in their lives due to a change in circumstance surrounding their job, home or marriage, for example. So it’s vital that firms think about how they can serve all of their customers - including the most vulnerable in society - fairly.

As we are all more than aware, our industry has come under significant pressure in the last few years to rediscover its sense of social purpose. We believe that vulnerability is an issue that should be at the centre of that debate - and it’s clear that this is becoming an increasingly significant issue for consumers too.

Giving vulnerable consumers a good service requires company-wide commitment to doing the right thing. That does not have to mean a wholesale redrawing of processes and systems but, rather, the flexibility to adapt if the strict application of those processes could result in a bad result for those in vulnerable circumstances.

We’ve recently worked closely with the financial ombudsman and public guardian on preventing complaints about power of attorney before they spiral out of control. It’s clear from our joint work in this area that people from across all walks of life are providing support for someone who might be losing the mental capacity to act on their own behalf. Yet too many times, we hear that misunderstandings and mistakes are being made by firms that have contributed to exasperating the situation.

Front line staff are vital. We do not expect customer-facing staff to become social workers able to deal with a variety of situations they are unused to but we do expect firms allow staff to treat customers as they would like a member of their own family to be treated.

The moral case for supporting vulnerable customers is clear but so is the business case. In getting it wrong, firms potentially put their business at risk. Firms have legal responsibilities and a duty under our rules to ensure customers are treated fairly. More than that, firms should ask themselves what loyalty they can expect from a customer - or their family - given poor service in their hour of need.

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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.