Research conducted by Paragon Bank has revealed a significant misunderstanding surrounding the necessity of appointing a Power of Attorney (PoA).
Nearly six in ten people who haven’t established PoA arrangements believe that their spouse or partner would be able to manage their financial affairs if they were unable to do so themselves.
The survey, which included over 1,300 savers, found that 58% of those without PoA arrangements think their spouse or partner could manage their savings. Additionally, a quarter of the respondents believe their children could handle their financial affairs.
However, without a PoA, relatives or friends are legally unable to manage someone’s savings account. In such cases, they would need to apply to the Court of Protection for a deputyship order, a process that can be time-consuming.
The survey also highlighted that 5% of those without a PoA acknowledged that their account would remain unmanaged, while 10% admitted they were unsure how their money would be managed.
Age appears to influence who savers believe will take responsibility for their arrangements. Savers aged between 55 and 64 are more likely to think their spouse or partner would manage their affairs (71%). Older respondents have greater belief in their children managing their money, with 31% of those aged 65-74, 49% of those aged 75-84 and 77% of those aged 85 and above believing their children would assume responsibility.
Younger age groups showed a higher level of uncertainty, with 18% of those aged 45-54 unsure about the management of their savings if they were incapable of doing so themselves.
Nearly three quarters (74%) of those savers without PoA mistakenly think they have measures in place in the event of mental incapacity or illness, with 60% believing they are covered because they have set up a will.
Additionally, 43% have filed all their documents in one place to assist friends and relatives in managing their finances.
Chris Williams, Paragon Bank’s Savings Customer Service Director, commented: “There is a significant misunderstanding about the ability of relatives and friends to manage a saver’s account if they are unable to do so themselves. Many people mistakenly believe that savings providers can simply liaise with a saver’s representatives without a Power of Attorney, which is not the case.”
He added: “Often, the representative of savers who are unable to look after their own finances need access to their money quickly; for example, they may need to pay for care. Without a PoA in place, this can elongate the process as they will need to obtain a Court of Protection deputyship order, which can take time.”
