The use of discretionary fund managers (DFMs) with LPAs has proved a further sticking point. In December last year a number of experts warned that a client’s LPA should hold an explicit permission to outsource investment decisions. Failing to fulfil this requirement could result in advisers being vulnerable to regulatory reprisal and potential legal challenges.
“It started when HSBC changed its guidance and said ‘if you’re acting under a power of attorney, and you haven’t got provision to use a DFM, then we can longer use one – it has to be on a execution-only basis’,” Ms Greig explains.
However, she adds that after discussions with the Office of the Public Guardian, this serves as guidance rather than a strict rule.
An overhaul to the current LPA system is now in motion. In a paper published in September titled ‘Ageing Population and Financial Services,’ the FCA outlined a greater need to make, register and store LPAs, which could be achieved through a slicker online system. As things stand, it is possible to register LPAs online, but physical signatures are still a mandatory requirement. The watchdog has proposed permitting electronic signatures instead.
Others are clamouring for a similar makeover for wills. In mid-July the Law Commission voiced concerns that current rules offered little protection to the vulnerable. The body suggested that one remedy would be to move to an electronic system.
Some argue that online processes could pose a security issue, though Ms Griffin is very much in favour of embracing the digital route, arguing this should not only benefit a number of parties but would also encourage consumers to plan their estates effectively.
“Although you can register LPAs online, if you’re dealing with financial institutions – such as your bank or a utility company – you would have to provide each of those with a copy,” she says.
“Wouldn’t it be great if there was a place where those companies could do a search online and get the details? Whether it’s wills or LPAs, anything the government can do to make things more accessible and user friendly, and less legalistic, is all for the better.”
