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1 Introduction
1.1 Who should read this practice note?
This practice note is for solicitors who have been appointed as an attorney under an Ordinary Power of Attorney, Enduring Power of Attorney or a Lasting Power of Attorney and are authorised to manage a donor's financial affairs.
1.2 What is the issue?
Attorneys are increasingly having difficulties with banking institutions accepting power of attorney documents as evidence of an attorney's authority to act on behalf of a donor.
The purpose of this practice note is to provide information about the different powers of attorney that can be used when dealing with a bank.
For more information on lasting powers of attorney see the practice note on Lasting powers of attorney.
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1.3 Status of this practice note
Practice notes are issued by the Law Society for the use and benefit of its members. They represent the Law Society's view of good practice in a particular area. They are not intended to be the only standard of good practice that solicitors can follow. You are not required to follow them, but doing so will make it easier to account to oversight bodies for your actions.
Practice notes are not legal advice, nor do they necessarily provide a defence to complaints of misconduct or of inadequate professional service. While care has been taken to ensure that they are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to them.
For queries or comments on this practice note, contact the Law Society's Practice Advice Service.
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1.4 Terminology
Must - A specific requirement in legislation or of a principle, rule, outcome or other mandatory provision in the SRA Handbook. You must comply, unless there are specific exemptions or defences provided for in relevant legislation or the SRA Handbook.
Should - Outside of a regulatory context, good practice for most situations in the Law Society's view. In the case of the SRA Handbook, an indicative behaviour or other non-mandatory provision (such as may be set out in notes or guidance).
These may not be the only means of complying with legislative or regulatory requirements and there may be situations where the suggested route is not the best possible route to meet the needs of your client. However, if you do not follow the suggested route, you should be able to justify to oversight bodies why the alternative approach you have taken is appropriate, either for your practice, or in the particular retainer.
May - A non-exhaustive list of options for meeting your obligations or running your practice. Which option you choose is determined by the profile of the individual practice, client or retainer. You may be required to justify why this was an appropriate option to oversight bodies.
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2 Powers of Attorney
There are three different types of power of attorney documents:
- Ordinary Power of Attorney (OPA)
- Enduring Power of Attorney (EPA)
- Lasting Power of Attorney (LPA)
On request, you must be able to produce evidence to the donor's bank that you are authorised under one of the aforementioned power of attorney documents to act on behalf of the donor.
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2.1 Ordinary Powers of Attorney
An OPA is usually made when it is difficult for the donor to manage their affairs for a number of reasons, for example because of a physical disability or the donor traveling abroad. You must be appointed under an OPA to manage all, or a specific aspect of, the donor's financial affairs before you can act on behalf of the donor for banking purposes.
An OPA can be cancelled at any time and becomes invalid if the donor loses capacity to make decisions within the scope of the particular power of attorney.
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2.2 Enduring Powers of Attorney
The Mental Capacity Act 2005 (MCA 2005) repealed the Enduring Powers of Attorney Act 1985 and it is no longer possible to create a new EPA. However, EPAs which were executed before the MCA 2005 came into force on 1 October 2007 are still valid whether or not they have been registered.
An EPA can be used to manage a donor's bank account or access records if it:
- was signed by the person and his/her attorney(s)
- and each signature was witnessed
- before 1 October 2007.
If the donor has full mental capacity an EPA does not have to be registered before you can use it, unless there is an express condition requiring registration.
The EPA must be registered with the Office of the Public Guardian as soon as the donor starts to lose capacity.
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2.3 Lasting Powers of Attorney
LPAs were introduced by the MCA 2005. This Act provides a statutory framework for adults who lack capacity to make decisions for themselves, or who have capacity and want to make preparations for a time when they may lack capacity in the future.
2.3.1 Registering an LPA
There are two types of LPAs:
- Health and Personal Welfare LPA
- Property and Financial Affairs LPA
Only a Property and Financial Affairs LPA authorises you to deal with bank accounts, finances and business matters.
Such an LPA must be registered with the Office of the Public Guardian before you can use it to access the donor's bank accounts or records. Registered LPAs have the mark of the Office of the Public Guardian on each page of the original document.
An LPA cannot be used until it is registered. It can be registered at anytime after it has been completed and signed by all those who are required to sign.
Once registered, a Property and Financial Affairs LPA can be used while the donor still has capacity, unless the LPA specifies otherwise.
A Health and Personal Welfare LPA can only be used when it has been registered and the donor has lost capacity.
For information on LPA forms, including the revised LPA forms that came into force on 1 October 2009, see the Office of the Public Guardian site.
For more information on LPAs see the Law Society advice on Lasting powers of attorney.
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2.3.2 Specific obligations
The MCA 2005 places a specific obligation on attorneys acting under a LPA to have regard to the MCA 2005 Code of Practice.
Under the Code of Practice you have a duty to:
- apply certain standards of care and skill (duty of care) when making decisions
- carry out the donor's instructions
- not take advantage of your position and not benefit yourself, but benefit the donor (fiduciary duty)
- not delegate decisions, unless authorised to do so
- act in good faith
- respect confidentiality
- comply with the directions of the Court of Protection
- not to give up your role without telling the donor and the court.
In relation to Property and Financial Affairs LPAs you also have a duty to:
- keep accounts
- keep the donor's money and property separate from your own, and
- comply with requirements of the Solicitors Account Rules.
As a solicitor acting as an attorney you are required to display a higher standard of care and skill than a lay person.
For more information see the MCA 2005 Code of Practice.
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3 More than one attorney
Where you have been appointed as an attorney with someone else it is important that you know whether the appointment was made:
- jointly, or
- jointly and severally, or
- jointly in respect of some matters and jointly and severally in respect of others (only possible for LPAs).
If you are appointed jointly and severally you can act independently of the other attorney. If you are appointed jointly you must act together with the other attorney when exercising your powers over a donor's estate. If you are appointed under an LPA to act jointly in respect of some matters and jointly and severally in respect of others you should ensure that you are aware of your duty to act in relation to handling of banking matters and act accordingly.
A joint appointment under a Property and Financial Affairs LPA is brought to an end by the death, bankruptcy or loss of capacity of any attorney. A joint appointment under a Health and Personal Welfare LPA is brought to an end by the death or loss of capacity of any attorney.
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4 Your Duties
As an attorney you have a duty to act within the scope of your powers as set out in the power of attorney document. For duties specific to LPAs see section 2.3.2.
4.1 Scope of your authority
You must be clear whether your authority to act is a general power, giving you authority to manage all the donor's property and affairs or whether any restrictions and/or conditions are placed on your power.
The power of attorney document may specify that as an attorney you only have authority to execute certain specific tasks. For example you may have the authority to pay bills on behalf of the donor but not to invest the donor's money for investment purposes.
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4.2 Compliance
Unless your authority to act as an attorney is restricted to exclude investments as defined by the Financial Services and Markets Act 2000, you may need to consider the investment business implications of your appointment.
If you are required to undertake investment activities, you may need to be authorised under the Financial Services and Market Act 2000 unless covered by an exclusion. You should also consider whether the Solicitors' Financial (Scope) Rules 2001 apply.
When acting as an attorney you must also be aware of the anti-money laundering requirements. For more information see the Law Society's practice note on Anti-money laundering.
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5 Bank Requirements
You should check with the donor's bank to find out whether it requires specific information or documents to prove your authority to act.
In most cases you will be requested by the donor's bank to provide the following documents:
- proof of the name and address of the account holder (if not already known to the bank);
- proof of your name and address (as attorney); and
- evidence of your authority to act for the donor in relation to financial matters.
To prove your authority to act on behalf of the donor you may be required to present one of the following documents before you can access bank accounts or records:
- an original EPA or OPA either registered or unregistered; or
- an original registered Property and Financial Affairs LPA; or
- a certified copy or office copy of the original EPA or OPA either registered or unregistered; or
- a certified copy or office copy of the original registered Property and Financial Affairs LPA.
Where an unregistered EPA or OPA is presented as evidence you may also be requested to present written approval from the donor.
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6 In practice: determining how powers of attorney apply
6.1 Example 1
Mrs Wilson has been diagnosed with early symptoms of dementia and has made a valid EPA naming her husband as attorney. At the moment she retains full mental capacity to make decisions.
The EPA can be used by her husband, even though it has not been registered, to make decisions for Mrs Wilson such as opening a bank account and managing her finances. However the EPA must be registered with the Office of the Public Guardian if Mrs Wilson starts to lose capacity.
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6.2 Example 2
Mr Parks has also been diagnosed with early symptoms of dementia but currently retains mental capacity to make decisions. He has made a Property and Financial Affairs LPA to allow his wife to manage his finances.
In this example the LPA cannot be used by Mr Park's wife to manage any of Mr Park's property or affairs, including opening an account for Mr Parks, until the LPA has been registered. The Property and Financial Affairs LPA can be registered at any time even while Mr Parks has full mental capacity.
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7 More Information
7.1 Statutory regulations
7.2 Further products and support
7.2.1 Law Society Practice notes
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7.2.2 Practice Advice Service
The Law Society's practice advice service provides support for solicitors on a wide range of areas of practice. Practice Advice can be contacted on 0870 606 2522 from 09:00 to 17:00 on weekdays.
Visit the Practice Advice Service web page.
7.2.3 Professional Ethics Helpline
Solicitors Regulation Authority's Professional Ethics Helpline for advice on conduct issues.
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7.2.4 Law Society publications
7.3 Acknowledgements
The Law Society acknowledges the contribution of the Wills and Equity committee in drafting this guidance.
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