Guiding light

The number of people managing bank accounts for others is on the rise. Since 2007, 536,941 lasting powers of attorney (LPAs) for property and affairs have been registered, and there are about 800,000 people in the UK living with dementia.

So I welcomed the guidance about accounts with attorneys recently released by the Law Society, British Bankers' Association, Building Societies Association and Office of the Public Guardian. The framework, aimed at banks and building societies, sets out universal rules covering everything from mental capacity to dealing with joint accounts to operational best practice. It is thorough, clear and useful.

However, while it is very early days, it is obvious that the guidance has not yet made it to the 'front line' of bank staff, let alone the detail of what is in it. Training for staff is fundamental if this guidance is to have any effect.

A client of mine, 'Mrs H', prepared an LPA in 2008. It was registered straight away. Last year, she was diagnosed with dementia and asked her attorney to help manage her bank accounts. She visited her local branch with her attorney and was asked to fill out an 'in-house' form that included questions about her health. She completed it honestly.

When the branch manager became aware of her dementia, Mrs H was told that she was not allowed to access her own accounts. Only her attorney could do this. Correspondence with the manager followed, but the position remained: 'bank policy' said that customers with dementia could not operate accounts when attorneys ?were involved.

As soon as the new guidance was released, Mrs H and her daughter wrote to the branch manager enclosing a copy. The only reply received (at the time ?of writing) was a brief note stating that ?the matter had been referred to the bank's legal team.

Mrs H feels let down by the bank. But she is also suspicious that her attorney hasn't been entirely honest with her either. The inability of the bank to allow her account to be operated in accordance with the Mental Capacity Act 2005 has left a vulnerable client doubting her attorney and caused a lot of upset. I hope that the guidance will make this sort of experience less common.

The framework is a step in the right direction, but it won't stop difficulties arising. Make sure your clients know what might happen and ensure you ?have documents to hand to help the process along.

A helping hand for clients and their banks Manage client’s expectations. When the LPA is registered, send a letter with a paragraph about using it. For example: “Registration of your LPA does not indicate that you lack capacity to make decisions about your own financial affairs. You can manage your own bank accounts for as long as you have the capacity to do so, and your attorney can deal with them at the same time. Experience has shown that banks can sometimes give the wrong advice about this, and who can operate an account when there is an LPA in place. If this happens, make sure that you refer the bank to the BBA framework, particularly section 2.4 (a copy of which is enclosed).” Advise clients that their attorneys will need to produce the original or a certified copy of any LPA, together with their ID, if they want to be allowed access to the donor’s accounts. Consider having a suite of factsheets about the different types of powers (the general power of attorney, the enduring power of attorney and the LPA) that clients can arm themselves with when they attend a bank or building society. Something short, setting out the principles of the Mental Capacity Act 2005 and referencing the ‘practice points’ in the guidance. Provide copies of the leaflet Guidance for people wanting to manage a bank account for someone elseto attorneys. Try not to include too many complicated restrictions or conditions that could cause uncertainty in LPAs that you draft. Clarity is key: remember, the donor may be dealing with someone who hasn’t seen an LPA before. Be proactive. Contact your local banks to see if you can organise some training for their staff. As clear as the guidance is, they may welcome the chance to talk it through.

Sofia Tayton is an associate at Lodders Solicitors

She writes the regular in-practice article on care and capacity for Private Client Adviser