Lasting Powers of Attorney – could recent FCA proposals leave the system completely open to abuse and fraud?
In a paper published recently City watchdogs the Financial Conduct Authority (FCA) have proposed changing the way in which applications for a Lasting Power of Attorney (LPA) are made.
Currently, the application form requires a witnessed signature from the donor, otherwise known as a wet signature. However in an attempt to improve financial services for the UK’s rapidly ageing population, the FCA believe that the Office of the Public Guardian (OPG) should be able to dispense with this signature requirement and process applications which are wholly made online.
LPAs are extremely powerful and complex documents which give an appointed and trusted individual the legal authority to make decisions on the donor’s behalf. Such decisions can be made in regard to their financial affairs or health and welfare should the donor lose the mental capacity to do so. On completion of the application an LPA requires both the understanding and consent of the donor. Under the current process, a wet signature is mandatory for any LPA application made to the OPG.
This recent proposal for change has attracted a fair amount of criticism in a short amount of time since being published. Solicitors for the Elderly, an independent, national organisation of lawyers who provide specialist legal advice for older and vulnerable people, describe the FCA’s recommendation as “reckless in its disregard for the potential for financial abuse.” It is thought that such a process may widen the door for fraud as in theory you would be able to take control of someone else’s bank account or even their property with the few clicks of a button. Without the requirement of witnessing a physical signature there would be no safeguards in place to stop a family member or friend registering a document on the donor’s unknowing behalf.
According to Action on Elder Abuse, more than 160,000 over 65s are victims of financial abuse every year, with the figure said to be rising sharply. Therefore whilst initiatives to make LPAs more accessible are welcomed by the legal sector, the security of older and vulnerable people must remain paramount.
In recent years the OPG have been gradually moving their processes online. 2014 saw the government launch a new web tool which allows LPAs to be filled in online; this was launched with the idea that it would result in it being simpler, clearer and faster to apply. This form of online application does however still require a wet signature and therefore retains the safeguards needed to protect the donor’s interests.
The OPG are now looking to take matters one step further and have been privately considering this proposed change for some time. It however remains to be seen when, or even whether, the process for a change of law to be passed by Parliament will commence.
In the meantime, carefully considered appointments together with experienced legal advice should remain a staple when contemplating an LPA.