Investigations into the use of powers of attorney - where a personal becomes responsible for the affairs of another due to diminished capacity - have increased 45 per cent, according to a freedom of information request from Royal London.
There were 1,729 investigations into the actions of attorneys and deputies in the 2017/2018 tax year – an increase from 1,199 for the 2016/17 tax year, according to the Office of the Public Guardian (OPG).
Powers of attorney allow people to appoint someone to make decisions on their behalf, should a time come when they lack the mental capacity to do so themselves.
If the person has already lost mental capacity, then the Court of Protection can appoint a deputy to make decisions on that person’s behalf.
There are two different types of power of attorney - one covering property and financial affairs and another covering health and welfare decisions.
The Office of the Public Guardian registered more than 2.3m powers of attorney by April 2017, with almost 1.6m covering property and financial affairs and a further 732,000 relating to health and wellbeing.
Actions of deputies were only responsible for 69 of the investigations of the Office of the Public Guardian, since there are more safeguards under the deputyship regime.
This includes the requirement to file annual returns detailing what decisions have been made on an individual’s behalf and why.
Royal London argued that these figures show that more education is needed on what people can and cannot do under a power of attorney.
Helen Morrissey, personal finance specialist at Royal London, said: “When done properly, the attorney fulfils a vital role in safeguarding the interests of the person they are acting for.
“However, the sheer number of investigations into the actions of attorneys is concerning and action needs to be taken to curb poor practice.
“While there have been instances where people appointed as attorneys have used their position to steal money from the person they are acting for, there are also instances where the attorney has unwittingly stepped beyond the boundaries of their responsibilities or have neglected to keep up to date records explaining what they have done and why.
“People taking on these responsibilities need clearer guidance on what they can and cannot do.”
Royal London has launched a guide on the key issues to be considered when acting as an attorney or deputy.
Charles Chami, director at Glamis IFA, with the increase in people suffering with dementia and other debilitating mental conditions, it is likely that the use of powers of attorney will continue to increase.
“Given this increase and the reported rise in investigations, I think an improvement in the information and guidance available for people taking on these responsibilities, is a sensible proposal.”
According to research from Zurich, 1.7 million retirees could be at risk of a later life financial crisis by 2025 because they have not set up a lasting power of attorney.