The number of people signing over financial control has more than tripled in the past five years.
According to new data obtained from the family courts by law firm Wilsons, the number of newly registered lasting power of attorneys — an appointed individual who can make financial and health-related decisions for someone else — rose to about 800,400 in 2019.
As reported by FTAdviser’s sister paper, The Financial Times, this is a 192 per cent increase on the 273,583 new LPAs in 2013.
It is up from 753,676 in 2017 — a 6 per cent rise — and has increased by more than a third since 2016.
An LPA allows someone, while they still have full mental capacity, to nominate a trusted friend or relative to make decisions on their behalf in cases of lost capacity.
Financial and property LPAs can include paying bills and handling financial decisions, while control over medical decisions and potential life-sustaining treatments sits under health and welfare LPAs.
The rise in the number of LPAs can be attributed to the rising age of the UK population. This is set to increase as the ONS predicts 14.3m people will be aged 65 and over in the UK by 2026 — a 3.5m rise on 2016’s 11.8m over 65s.
Additionally, the number of people with dementia diagnoses has more than doubled since 2005 according to the NHS. In 2005, 213,000 people had been diagnosed. By March 2018, 535,000 were registered as suffering from dementia.
But data obtained by law firm Nockolds shows the increased number of LPAs comes with an increased amount of misuse.
Nockolds’ research found the number of court actions against people with LPAs rose by 71 per cent from 2016/17 to 2017/18. The Office of Public Guardian — the government office which manages LPAs — made 465 applications in 2017/18 to remove or censure attorneys, up from 272 the previous year.
Making improper gifts and not acting in the vulnerable person’s best interests were two of the main reasons for having attorneys censured or removed.
Additionally, the OPG launched 1,886 safeguarding investigations in 2017/18, nearly a 50 per cent rise on the previous year.
Peter King, partner at Nockolds, said it was likely these figures were “just the tip of the iceberg”.
He said: “While action by the OPG may be increasing, misconduct is notoriously difficult to detect, so these numbers likely represent the tip of the iceberg.
“Many LPAs are now created without any professional advice. Unfortunately, the system is open to abuse, and with most banking now conducted online, there is little to no oversight of the transactions that take place.”
Paul Stocks, financial services director at Dobson & Hodge, said LPAs had become a very common topic in financial planning.
“We discuss power of attorneys with all clients and as time moves on, I generally make it a higher agenda item – even more so if the client is single.
“We therefore see them as an important aspect of financial planning and explain them as being an insurance against the risks of being unable to make financial decisions. As such, they very much go hand in hand with wills arrangements.