“Selfies” 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 million. 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.

Said Michelle Gavin, with Coventry-based Solicitors Band Hatton Button: "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's just as likely to be needed by 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.

"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. While 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.

She 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.

"But the important consideration is choosing the right person to be an attorney. So, think about 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, but also appoint a professional, and they can undertake regular checks on how matters are being handled."

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.

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.

She added: "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."

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.

This is not legal advice; it is intended to provide information of general interest about current legal issues.