Fears over power of attorney safeguards as fraud claims rocket

Investigations into individuals appointed to act on behalf of someone no longer able to manage their own money have increased by 44pc over the past year, new figures reveal.

Power of attorney agreements allow a person of sound mind to appoint a trusted friend or family member to look after the “donor’s” financial well-being if they lose mental capacity.

But in a growing number of cases the Office of the Public Guardian, the government agency responsible, has had to open investigations into “attorneys” or “deputies” (court-appointed attorneys), normally over allegations of fraud.

A Freedom of Information request filed by Royal London, the pension company, showed that 1,729 investigations were opened in the 2017-18 tax year, compared with 1,199 the previous year. In 2017-18 there were just 82 investigations related to deputies, who are monitored under a far tighter regime and must file annual returns detailing their actions.

The Government has been encouraging families to set up powers of attorney in light of Britain’s ageing population and the sustained rise in the prevalence of long-term debilitating conditions such as Alzheimer’s. As a result there are now more than 2.3 million agreements registered. There are two types, one covering property and finances and another covering health and welfare. Each costs £82 to set up.

Yet there is a growing fear that there are insufficient checks on individuals who exercise control over another’s finances. Last summer, retired senior judge Denzil Lush warned that agreements could have a “devastating” effect on families and said he would never sign one himself.

Royal London’s Helen Morrissey said: “The sheer number of investigations into the actions of attorneys is concerning and action needs to be taken to curb poor practice.

“While there have been instances where people appointed as attorneys have used their position to steal money from the person they are acting for, there are also instances where the attorney has unwittingly stepped beyond the boundaries of their responsibilities or has neglected to keep up-to-date records explaining what they have done and why.”

Telegraph Money has heard from dozens of readers who suspect that family members have been stealing under the cover of attorney agreements. It can be incredibly difficult to prove that someone is abusing their position especially if, as is common, the donor and attorney live together.

Rachael Griffin, of advice firm Old Mutual Wealth, advised appointing at least two attorneys, specifying which decisions must be made jointly, and adding a “safeguarding clause”. This can require that an attorney file accounts to a third party periodically, for example.