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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.
Police figures show that, in the first six months of 2017, more than £500 million in attempted card fraud was prevented, with actual fraud losses amounting to just less than £290 million. 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. Professionals are encouraging individuals to make formal arrangements that can work alongside such safeguards.
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 it also applies to someone undertaking long-term travel or working overseas for a corporate employer. Even day-to-day management of family finances may see couples sharing access to their single named bank accounts.
It is not a good idea to have informal arrangements in place, even with family members, as you are likely to be breaching the terms and conditions of your account if you have not acquired the bank’s consent to access their bank account. You could leave yourself exposed to a criminal offence under S.1 or S.2 of the Computer Misuse Act which prohibits unauthorised access to ‘computer material’ which includes online bank accounts. Given the possibility of a criminal offence and the stricter requirements by banks and others, it is something that really 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. While many imagine these are something for the elderly to consider in case of dementia, they are increasingly important for asset protection and to manage today’s strict security procedures.
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. Therefore, they can deal with investments and write cheques.
The important consideration is choosing the right person to be an attorney. Assess how well they look after their own finances, how well you know them and how sure you are that they will make the right decisions for you. As an added precaution, you can appoint two attorneys who must both be involved in each decision, although that can make transactions more complicated if they must both be involved at the same time. Another option is to appoint a family or friend to act, as well as a professional to undertake regular checks on how matters are being handled.
There are two types of LPA. Whilst Property & Financial Affairs LPAs are used to appoint someone to look after your finances, Health & Welfare LPAs appoint someone to deal with issues such as where you live and medical treatment if you become mentally incapable.
Any LPA must then be registered with the Office of the Public Guardian, the administrative arm of the Court of Protection, for a fee of £82 per LPA before it can be used. The registered LPA can then be submitted to any institution such as a bank or utility provider, allowing them to deal directly with any appointed attorney named in the LPA.
LPAs are often thought to be for older people, but they can be just as important when you are younger – for example, it can be invaluable if someone is involved in an accident which leaves them incapable of managing their affairs, or if you are travelling or working out of the country for long periods and unable to manage your affairs directly.
Without a registered LPA, where someone has become mentally incapable, their financial and personal affairs must 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 made. The deputy must also produce annual accounts, and there are legal and Court fees throughout the process.