A charity is calling on the government to reform the lasting power of attorney system after research showed it fails to provide support for vulnerable consumers.
In its report entitled A Little Help From My Friends, The Money and Mental Health Policy Institute published research which showed only 3 per cent of people who have experienced a mental health problem have used an LPA.
On top of this, the findings, out today (July 16), showed that of the 2,093 consumers polled in June fewer than a third (32 per cent) would consider using an LPA in its current form.
The main problems identified with the current system were the possibility of risk abuse, the requirement to delegate excessive power, the lack of privacy and the fact it was a difficult and complex system.
Only 24 per cent thought there was a safe way to give someone access to their finances while 53 per cent were concerned they could be taken advantage of.
An LPA allows someone, while they still have full mental capacity, to nominate a trusted person to make decisions on their behalf in case 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.
But today’s research showed that 30 per cent of consumers felt current third-party access options — including LPAs — were unsuitable.
In its report, the MMHPI stated that consumers suffering from mental health would benefit from mechanisms that give a third party visibility of an account or notifications or worrying activity and some third party control but not all.
The report also showed that many consumers felt providers and banks often failed to make it easy for others to help with their everyday account management, despite the technology available.
Fewer than one in 10 (8 per cent) felt that providers made it easy to get help on day-to-day management while only 7 per cent felt providers facilitated this access when a person was feeling unwell.
Therefore, the four principles the government should base their reforms around are to minimise risk of fraud and abuse, a balance of autonomy and support, to preserve privacy and to ensure better access to the system, according to the charity.
The way to achieve this was to reform the system of LPAs by making it more flexible which can help meet the specific needs of different individuals.
In particular, the charity has urged the government to learn from Ireland. Ireland has a tiered system of LPAs, all sitting with their LPA framework.
Under this a decision-making assistance agreement allows an individual to appoint someone to support them with the process of making decisions when they feel their capacity is in question, but it is a supporting role rather than a ‘decision on their behalf’ agreement.
A co-decision-making agreement means someone can jointly make their decision with the individual, while a decision-making representative will be appointed if the situation is more serious.
The report states: "The [government] should consider the challenges firms face in implementing structures to facilitate third party access, and take steps to balance the need for LPAs to be sufficiently flexible enough to meet the specific needs of different individuals, with the need for these documents to be properly executed and enforced through standard systems."
The charity also stated that financial services firms should offer customers the ability to set up simple alerts to a third party in response to triggers like a balance falling below a certain level, entering an overdraft or spending above a certain amount.
This would allow third-parties to oversee activity without having full control, minimising the consumer’s vulnerability to risk.
Helen Undy, chief executive of the MMHPI, said: "The current LPA system is a bit 'all or nothing', with many people with mental health problems opting for 'nothing' rather than giving up total financial autonomy.
"People often need support with some decisions, some of the time, but the current system fails to meet their needs. As a result, millions of people are relying on risky workarounds to access this support, like sharing bank cards and login details, which expose them to fraud and abuse."
She added: "We also want to see banks and fintech firms offering more flexible tools now, such as sharing balance or spending notifications or allowing 'view only' access on accounts.
"The tech is very doable, we just need to prioritise using it to help those who are currently struggling the most."
Paul Stocks, financial services director at Dobson & Hodge, said one of the main concerns raised by clients when discussing the granting of an LPA was the fear of it being abused.
He said: "Therefore, any measures which can be implemented to manage that fear would be welcomed."
Robin Bailey, an adviser at Chase de Vere, said: "There are issues with the current power of attorney system and as a result we see many abuses of power. It would be sensible to consider alternative approaches, particularly to protect vulnerable people."
Mr Bailey suggested that having a similar level of supervision for LPAs as deputies appointed by the Court of Protection — which is more stringent — could limit misuse in the system.
imogen.tew@ft.com
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