Thousands at risk of criminal gangs as use of financial safeguards plummets

Power of attorney registrations fall 30% amid record crime wave

Thousands of elderly people are threatened by a rising tide of fraud because of an “alarming” drop in the use of one of the key financial safeguards for vulnerable people.

The number of “lasting powers of attorney” registered at the Office of the Public Guardian since the pandemic began in April last year fell by 30pc to fewer than 570,000 at the end of February from 804,000 for the same period a year previously, figures obtained via the Freedom of Information Act showed.

In response, the Ministry of Justice said it would consult on how to overhaul and modernise the system to make the application process faster and protect more people from fraud and abuse.

Lasting powers of attorney are legal safeguards that allow elderly, disabled or vulnerable people to appoint family members or friends to manage their money when they are unable to do so confidently or lack the mental capacity to do it themselves. They offer a vital layer of protection against financial abuse by criminal gangs or unscrupulous individuals.

They also allow relations or other carers to take control of someone’s finances should they become too ill to manage their own affairs. This includes becoming incapacitated by Covid-19.

Rachael Griffin of Quilter, the financial advice firm, said the figures were “alarming and a cause for concern”.

“There is a serious risk that a lot of people are being left exposed to a number of dangers, potentially for an extended period of time. There is definitely a danger that something untoward can occur,” she said.

She said the fall in the use of LPAs was caused in part by the pandemic, which had made it harder for people to gather the relevant paperwork and supporting evidence, such as medical records, to obtain the legal permissions.

The number of applications for LPAs has fallen by 25pc since April last year but the number issued has been further reduced by delays at the OPG, the government department that oversees power of attorney arrangements.

Once someone loses the capacity to manage their own money – if they develop dementia or serious mental health problems or fall into a coma, for example – it is too late to put an LPA in place. In these circumstances families must resort to obtaining legal permissions via the Court of Protection, which is far more onerous, time consuming and costly.

The OPG said it recognised that the pandemic had made it more difficult to get protections in place and said it had published guidance last April on how to do this safely while maintaining social distancing. It added that it had extended its working times to help reduce delays in processing applications.

This comes amid the biggest wave of fraud on record, combined with rising levels of financial vulnerability. Fraudsters used the pandemic to steal a record £479m from almost 150,000 victims in 2020.

Criminals used fake texts, phone calls and other ruses to steal 5pc more cash through money transfer scams than in 2019, according to figures from UK Finance, the banking trade body.

Gangs have used coronavirus to their advantage and are increasingly targeting vulnerable people who have been confined to their homes.

A total of 1.4 million adults say they have handed over money as a result of a suspected scam during the coronavirus crisis. People regarded as vulnerable are far more susceptible to these scammers: around 12pc have handed over money to con artists, compared with just 1pc of those not regarded as vulnerable, according to the Financial Conduct Authority, the City watchdog.

Almost 30 million adults have some degree of vulnerability, up from 24  million before the pandemic began, the watchdog said.

There are two main types of power of attorney. Property and financial LPAs give your chosen carer the power to manage your bank account, pay the bills, collect your pension and sell your home in your stead, should you be unable to do so yourself.

Health and welfare LPAs allow attorneys to make decisions about your daily routine, medical care, whether you live in care or not and life-sustaining treatment. Each type costs £82 to register.

A government spokesman said: “Applications for lasting powers of attorney are increasing and we expect them to be close to pre-pandemic levels shortly.”

By Harry Brennan 4 April 2021 - Daily Telegraph