Selfie shots signal end to informal financial management

International payment processor Visa is launching a platform to allow banks to integrate biometric security that will use selfies, fingerprints or voice records to approve purchases in the drive against fraud.

In the first six months of 2017, over £500 million in attempted card fraud was prevented, with actual fraud losses coming in at just under £290 million¹. And while the figures were 11% lower than the same period in 2016, following coordinated action by financial institutions and the police, tackling fraud remains a top priority for the sector.

As well as hitting the fraudster, the increased use of biometric identification will also affect those who allow family or friends to informally manage their financial affairs, and professionals are encouraging everyone to get formal arrangements in place, that can work alongside such safeguards.

Lynn Wicks, a private client Partner with East Anglian based solicitors Ashtons Legal and accredited Solicitor For the Elderly, said: “There are many reasons why you may want to allow someone else to manage your finances. The obvious situation is if you are elderly or ill, but the unexpected can happen and you may need someone to manage your finances at any time – for example, if you are is involved in an accident, which leaves you incapable of managing your affairs, or if you are travelling or working out of the country for long periods and unable to manage your affairs directly.”

“Potentially day-to-day management of family finances may see couples sharing access to their single named bank accounts. But it’s not a good idea to have informal arrangements in place, even when it’s family left in charge, as you’re likely to be breaching the terms and conditions of your account, and leaving yourself exposed. Combined with stricter requirements by banks and others, it’s something that should be dealt with through formal agreements.”

By using a Lasting Power of Attorney – known as LPAs – people can appoint someone to look after their financial affairs on their behalf. Whilst many imagine these are something for the elderly to consider in case of dementia, they have an increasingly important place, for asset protection and to manage today’s strict security procedures or to offer protection and assistants in unforeseen events, such as an accident or a stroke where there is no warning and it can happen to anyone regardless of age .

Lynn explained: “By making an LPA and appointing an attorney to manage things for you, they will have power to enter into any transaction, unless you have specifically forbidden it, so they will be able to deal with investments and to write cheques. As such, it is important to choose the right person or persons to be an attorney. You can appoint more than one attorney and require them to make all or certain decisions together, although that can make transactions more complicated. Equally you can appoint a professional attorney with a family member, who can undertake regular checks on how matters are being handled.”

“A well-designed LPA should give your attorneys the powers they require with the security you want. LPAs can be designed to include restrictions, instructions and supervisions; this is in addition to the safeguards already in place. Using a specialist lawyer will also provide you and your attorneys with an explanation as to the extent of those powers and their limits and accompanying responsibilities.”

It is also possible to have separate LPAs for your personal and business affairs. Jack Burroughs, a private client specialist with Ashtons Legal explains: “As a business owner you have additional things to think about when making an LPA. For instance, it may be that the person you think best placed to carry on your business if you lose capacity is not the same person you would want to act as your attorney in relation to your personal finances. It is possible to make two different LPAs appointing different people in relation to different assets. This is something on which we would recommend you take legal advice, to ensure that the two different LPAs fit together properly with no gaps.”

“An LPA should be part of any business owner’s planning for the future. It is comparable to an insurance policy: you hope that you’ll never need it, but it’s reassuring to know that it’s there, and in the worst case scenario, it will make things much easier for everyone.”

As well as Property & Financial Affairs LPAs, used to appoint someone to look after your finances, there are also Health & Welfare LPAs, used to appoint someone to deal with issues such as where you live and medical treatment if you become mentally incapable. If you lose capacity to make decisions for yourself and you have not yet made a Health and Welfare LPA then the relevant professional, such as Social Services or a Doctor, will make the decision you are unable to. The decision will be made in your ‘best interest’ and family should be consulted but the relevant professional will be in the driving seat.

Any LPA must then be registered with the Office of the Public Guardian, which is the administrative arm of the Court of Protection, before it can be used, and involves a fee of £82 per LPA. The registered LPA can then be submitted to any institution such as a bank or utility provider so they can deal directly with any appointed attorney named in the LPA.

The other advantage of an LPA is that without one, where someone has become mentally incapable, for whatever reason and at whatever age, their financial and personal affairs will have to be managed by a deputy appointed by the Court of Protection. This is a slow and expensive business for most families, as relatives may be forced to get permission from the Court for each transaction that they carry out. The deputy is also required to produce annual accounts, and there are legal and Court fees throughout the process.

http://www.actionfraud.police.uk/news/latest-industry-data-shows-fall-in-financial-fraud-sep17