This guidance looks at our approach to complaints involving powers of attorney. It doesn’t cover other types of third-party mandates that might apply to consumers’ accounts.
Making a power of attorney is a way of giving someone legal authority to manage your affairs.
The person giving their authority – the donor (or in Scotland, the granter) – can choose one or more people aged over 18 – attorneys – to make decisions about their finances, legal affairs and health and care options. People generally choose to make a power of attorney in case they lose mental capacity in the future – for example, because of dementia or an accident.
The donor can decide whether their attorneys may act jointly or jointly and severally. Jointly means that the attorneys must all agree on how to act, whereas jointly and severally means they can also act on their own. If the donor would like their attorneys to decide some matters jointly but others severally, they can specify this when they set up the power of attorney. And the donor can also specify particular affairs that they don’t want their attorneys to manage.
A power of attorney can be changed or cancelled by the person who set it up while they have mental capacity. It can’t be used once the donor has died.
Attorneys agree to act in donors’ best interests. In each country or region, the organisation that grants powers of attorney has responsibility for investigating their abuse.
Different types of power of attorney are available in England and Wales, in Scotland, and in Northern Ireland. And different rules apply to their use. Other legal steps can be taken to grant authority if someone loses mental capacity without making a power of attorney.
Having power of attorney doesn’t mean the attorney will be able to manage the donor’s finances straight away. Before they can do this, the attorney will have to register the power of attorney with the financial business in question – which is an additional and unrelated process to registering it with the body who grants it (for example, the Office of the Public Guardian (OPG)).
The exact steps the attorney will have to take – and the time involved – will vary from business to business. However, businesses usually ask to see the power of attorney or a certified copy and proof of the donor and attorney’s (or attorneys’) identities. The attorney may also have to fill out a form specific to the particular business.
A property and financial affairs LPA may be used – with the donor’s permission – as soon as it’s been registered with the Office of the Public Guardian (OPG). However, a health and welfare LPA may only be used once the donor has lost the capacity to make decisions for themselves. It will need to be registered with the OPG before it can be used.
in Northern Ireland
If someone loses mental capacity before making a power of attorney, then different authorities might need to be involved in deciding who should manage their affairs:
As long as they still have mental capacity, a donor can complain themselves – both to the business and to us. If they do want someone to complain to us on their behalf, we won’t need to see the power of attorney. They can just give the name of the person who they’d like to represent them on the complaint form – the same option we give everyone referring a complaint to us. This doesn’t have to be the attorney.
However, many powers of attorney only start being used once the donor has lost capacity. If a problem arises after this point, only an attorney with the relevant authority can make a complaint. In these situations, we’d ask to see a copy of the power of attorney before taking on the case. If we do take on the case, the attorney has the same right as any other consumer to ask someone else to deal with us for them. But it’s very unlikely that we would pay the fees of any professional third party the attorney instructs to do this.
Before we take the case on, we’ll need to make sure the power of attorney has been validly granted. We should ask to see a copy of the power of attorney – but we don’t need the original or a certified copy.
We just need to make sure the person we’re talking to has the authority to talk to us. Usually, we don’t find any problems. However, we might need to check:
These are the same basic checks we’d make sure a business had carried out before allowing an account to be operated using a power of attorney.
Problems consumers refer to us include:
Sometimes, a financial business is appointed as attorney. If the appointment amounts to an ancillary banking service to an activity we cover, we can consider complaints about the way in which the financial business has acted as attorney.
The law around mental capacity is complicated – and procedures vary between country and region. We’ll check the business acted in line with the relevant law, as well as the power of attorney in question. If a consumer tells us a business has allowed an attorney to act beyond their powers, we’ll look carefully at the individual circumstances of that case.
The underlying issue may be more general – for example, if the business has allowed a power of attorney to be used before it is registered. Or it might be something to do with the wording of that particular power of attorney – which could set out very specific and/or complex limits on attorneys’ powers.
Donors aren’t bound by anything their attorney does outside of the legal authority they’ve been given. The general legal principle is that the wording of a power of attorney is given a strict interpretation. So if we find the business has allowed the attorney to do something they didn’t have permission to do, it’s very likely we will tell the business to cover any financial loss to the donor.
However, we wouldn’t expect a business to get involved in a family dispute. This might arise, for example, if a donor disagrees with something an attorney does within their legal powers – or if attorneys with joint and several authoritydisagree with each other’s actions. We can’t make decisions about these kinds of issues. So in some cases, we might say it would be more appropriate for a complaint to be heard by a court.
Sometimes, an attorney who has carried out a review of the donor’s affairs tells us they think something’s gone wrong. For example, that an investment shouldn’t have been made, an account should have been switched, or certain transactions weren’t authorised.
We understand that if the donor has already lost mental capacity, complaints like this can be difficult for the business (and for us) to investigate – because the donor might not now be able to give their account of events. However, we’ll look at documentary evidence about what happened, and whether relevant law, regulations and guidance and good industry practice were followed.
The Alzheimer’s Society has made it clear that it isn’t for businesses to diagnose mental capacity issues like dementia in their customers. A business can’t insist that a consumer set up a power or attorney.
Depending on the circumstances, we might decide it would have been reasonable for the business to allow another type of third-party mandate to be applied to a consumer’s account.
On the other hand, where a power of attorney is already in place, there may be situations where a business needs to use its judgement – balancing its duty to act on the attorney’s instructions with its duty to protect its customer, the donor.
For example, we see complaints where a business is refusing to honour a cheque written by the attorney from the donor’s account to their own.
An attorney must act in the donor’s best interests. So without evidence that the funds were to be used for the donor’s benefit, we might agree that business’s decision is reasonable.
Where a power of attorney has been abused – and we think a business should have reasonably suspected that this was happening – then we’ll check the business reported the matter to the relevant authority.
Consumers are often frustrated by the businesses’ systems for registering powers of attorney – which can seem like an extra layer of bureaucracy at a stressful time. However, we understand these systems are in place for security reasons – and we can’t tell a business to change them. But we can check whether the business followed its process efficiently –explaining clearly to the customer what they needed to do – or whether it caused unnecessary confusion, delays or inconvenience.
Equally, while we can’t tell how a business should train its staff, we’d expect front-line staff to have the appropriate knowledge to deal effectively with customers wanting to use powers of attorney. We’d check whether the appropriate records were clearly visible to all relevant staff. We’ll also look at how well the business communicated with its customers – to make sure they understood how the donor’s affairs could be accessed and administered. We’ll consider the impact any delays or poor service had on the donor and/or the attorney – and may factor this in to any settlement we decide on.
A business might offer different accounts and facilities to attorneys and donors than to other customers. For example, they may not offer online banking to donors – or issue a debit card to an attorney.
Unfortunately, this discretion can make things difficult for consumers – as they try to understand what they can and can’t do on different accounts with different businesses. And it’s understandable that people generally choose an account that meets their needs when they can use it themselves – rather than the one that will be easiest for a donor to use in years to come.
We can’t usually help with complaints about this – as in general, businesses have discretion about the services they provide. So we’ll always make sure that the business set out the position clearly to the attorney and/or the donor – so they were able to make an informed choice about how best to manage the donor’s affairs. And if the services available change at any point, we’d expect the business to notify its customers and clearly explain their options.
If we agree uphold a complaint involving a power of attorney, we’ll check that the donor hasn’t lost out as a result of the business’s mistake.
We know that thinking about being unable to manage your own affairs, and the impact of this, can be extremely distressing – as can seeing a relative or friend lose mental capacity. In addition, making a power of attorney generally involves a financial cost – which is likely to make any problems using it particularly frustrating. And complaints involving a power of attorney can involve sensitive family disputes, sometimes going back several years.
For these reasons, the consumers who complain to us are often very upset. When we look into a case, we’ll check that the business involved has shown an awareness of the customer’s situation – and treated them sympathetically.
The complaints we see involve the types of power of attorney that relate to financial affairs. But when we’re assessing the wider effect of a problem, we’ll bear in mind, however that the donor may have more than one type of power of attorney – and difficulties operating one could impact on the other.
As we explain in our guidance on compensation on non-financial loss, we’re not usually in a position to award compensation to a consumer’s representative – in these cases, their attorney.
However, it’s important to consider whether seeing their attorney experience distress has in turn caused the donor distress. And we understand that – recognising the emotional or sensitive nature of some situations – businesses do sometimes offer attorneys compensation for any upset or inconvenience they’ve experienced.