Power of Attorney system is exposing people with mental health problems to financial abuse, says new report
New research by the Money and Mental Health Policy Institute (MMHPI) shows that many people with mental health problems are struggling to safely gain support from family and friends, because of the complexity and ineffectiveness of tools such as Power of Attorney.
A new report by MMHPI, which was established by Martin Lewis in 2016, says that people with mental health problems are more reliant on friends and family for help with money management, due to common symptoms such as reduced memory, increased tendency to act impulsively or difficulties weighing up complex information. But they have difficulties getting this support.
The charity says its research shows that Power of Attorney – a legal document that lets you nominate a trusted friend or relative to look after your affairs if you lost the capacity to do so yourself – gives too much power to the third party. It adds it also fails to reflect the fluctuating nature of mental health and is too difficult to use in practice.
Its research found two-fifths of people with mental health problems (43%) have let someone else use their credit or debit card, and one in five (19%) do so on a weekly basis.
In a separate survey by MMHPI of more than 250 people with mental health problems who have received help, less than a quarter (24%) said they have safe ways to give someone else access to their accounts. In a survey of more than 100 carers, 60% said the way they support a loved one with money management puts them both at risk.
MMHPI is now calling for the next Prime Minister to include reforms to the Power of Attorney system in a long-awaited paper about the future of social care.
See our Power of Attorney guide for more information on the current system.
What action does MMHPI want?
MMHPI says one of the key outcomes it wants is for people with mental health problems and their carers to have a clearer variety of options for supported decision-making which don't involve giving away full financial control, which would also help essential services firms, such as health and utility providers, implement Power of Attorney more effectively.
The charity is also calling for firms to give people other tools to share financial decision-making – including options such as 'carers' cards' or third-party notifications on spending and bank balances – to help people gain support when they need it while preserving some control for themselves.
What does MMHPI say?
Helen Undy, chief executive of MMHPI, said: "When you're struggling with your mental health, getting help from family and friends to manage money can make the difference between staying on top of your finances or falling into serious debt.
"But the current Power of Attorney system just doesn't meet the needs of many people with fluctuating mental health problems, who want to share some decisions, some of the time – without feeling as though they are giving away total control. Faced with a system that doesn't meet their needs, people are relying on risky workarounds to access this support, like sharing PINs and passwords, which expose them to fraud and abuse.
"The new Prime Minister has an opportunity to improve the lives of millions of carers in the UK, and the 11 million people living with mental health problems, by fixing this broken system. We also want to see firms themselves offer a greater range of tools to help people share financial decisions, from carers' cards to more options for third-party billing and notifications. This technology exists – it's about time it was used where it's really needed."