AML: HMRC flexes enforcement muscle to the tune of £7.8 million
Yesterday, the Financial Conduct Authority (FCA) published a paper suggesting that more should be done to enable individuals (“donors”) to make, register and store Lasting Powers of Attorney (LPAs) online.
Currently, LPAs can be registered online but they require physical signatures. Once complete, the donor needs to take certified hard copies, or the original copy, to get them registered. The FCA has suggested that an online system, which takes the user from the start of the process (making an LPA) through to registration and storage of the LPA, would save time and reduce administration.
Similar suggestions have recently been made in relation to the making of electronic Wills (see our blog Wills by WhatsApp?).
These proposals may save time, paper and energy, but there is a real risk that safeguards designed to protect individuals will be compromised.
Dementia and Alzheimer's disease became the leading cause of death in England and Wales in 2015, and financial exploitation of the elderly is on the increase. Indeed, LPAs were introduced in 2007 following concerns around the potential abuse of existing Enduring Powers of Attorney (EPAs). Figures obtained by Old Mutual Wealth suggest that in recent years there has been a marked increase in the number of LPAs registered, from 128,745 in 2010, to 441,361 in 2015.
As a result of previous concerns with EPAs, the ‘newer’ LPAs contain a number of safeguards. They require a ‘certificate provider’ to confirm that the donor understands what (s)he is doing and that nobody is forcing him/her to make an LPA. In addition, original signatures are required in the presence of a witness. The FCA paper notes that this element “arguably reduces the risk of fraud” which, of course, is the intention.
Strangely enough, the FCA paper concedes that some elderly individuals may not want to use online services. In relation to online banking, these individuals often allow their carer or other trusted person to access and check their account. If the LPA process was moved online, surely the same would apply? There is a huge risk that the elderly or vulnerable could be pressured into creating LPAs online. Making an LPA gives others authority to manage your financial affairs and/or health and welfare, and it is therefore an incredibly important document. The idea that some may find an online procedure overwhelming and, therefore, delegate the process to a third party, seems like a recipe for disaster.
For further information about the issues raised in this blog, please any member of our private client team.
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