Financial Ombudsman issues guidance on Powers of Attorney

Registering a power of attorney can often be a stressful time for all those involved but recent reports have revealed that the situation may be further exacerbated by financial institutions failing to recognise powers of attorney at critical times, particularly when a loved one has lost their mental capacity.  In response, the Financial Ombudsman has issued guidance, tips and information about handling difficult situations.  The information is intended for consumers and banks and can be accessed via the Financial Ombudsman website.

A key focus of the resources designed by the Ombudsman for financial institutions is on helping banks understand the stress that a Donee (the person registering a power of attorney) could be under and how they can avoid issues that may lead to complaints against the bank.  The informative website also explains what a power of attorney is and when it might be used.

Consumers can also refer to the website to better understand the requirements of their bank to enable a power of attorney to be registered.

The aim is to resolve many of the misunderstandings around powers of attorney which tend to be at the root of the problems that arise.  Although some situations will still require further help from the Ombudsman, the Office of the Public Guardian and the Courts, it is hoped that this new guidance will help bank staff talk through the options with customers and their loved ones, helping them to better serve the interests of a Donee dealing with dementia or other conditions that may affect their mental capacity.

BLM Blogs are not meant, or designed, to offer personal advice; for advice in relation to your own situation, please contact us.

New Pension Freedoms – how you can you use your pension fund to pass money to your children.

The new pension rules, which came into force in early April 2015, have received a great deal of attention in the last few months with the main focus being on people being able to access their funds in new and exciting ways. For example, the couple who have been in the news recently who have sold up and set off on a round-the-world voyage in a small boat…all on the strength of being able to access her pension fund!

However, there is another significant change that has been less publicised – the ability to pass a pension fund on to children or other beneficiaries i.e. intergenerational planning.

For some, a pension fund is now seen as a good way of passing wealth onto their children, rather than providing an income for themselves. Those who are able to live off other means, rather than their pension, could use the pension as a very tax efficient way of passing their wealth to their beneficiaries.

Broadly speaking the death benefit changes can be split into 3 categories:

  1. Death before the age of 75: Your pension fund can be passed on tax-free.
  2. Death after the age of 75: Your pension fund can be passed on but is taxable at a lower rate of 45% (rather than 55%), although there are ways to reduce this.
  3. On death the fund can be passed to an individual, a pension fund of an individual, a trust or a charity.

With the introduction of the new pensions freedoms a whole new world of flexibility has been opened up and we are already seeing a shift in terms of how pensions are perceived; from inflexible often maligned financial products to dynamic and exciting products offering a multitude of possibilities.

As a starting point anyone with an existing pension should review their death benefit nomination. Moving on from there, clients should consider whether their pension really is ‘their’ pension or something else entirely!

BLM offers a pension review service offering to review existing arrangements to optimise them for a client’s situation and ongoing requirements. To contact us click here.

There could be adverse consequences in taking or re-arranging your pension benefits and you should always seek advice from a suitably qualified and able financial adviser.

BLM Blogs are not meant, or designed, to offer personal advice; for advice in relation to your own situation, please contact us.