There is a “significant misunderstanding” among UK adults surrounding the necessity of appointing a Power of Attorney (PoA), research by Paragon Bank has shown.

A study by the bank found that more than half (58%) of those without PoA arrangements think their spouse or partner could manage their savings.

Paragon also stated that a quarter of the respondents to its survey, which included over 1,300 savers, believe that their children could handle their financial affairs.

However, without a PoA, relatives or friends are legally unable to manage someone’s savings account. In such cases, they would need to apply to the Court of Protection for a deputyship order, which Paragon warned can be a time-consuming process.

The bank’s survey also highlighted that 5% of those without a PoA acknowledged that their account would remain unmanaged, while 10% admitted they were unsure how their money would be managed.

Paragon Bank’s savings customer service director, Chris Williams, commented: “There is a significant misunderstanding about the ability of relatives and friends to manage a saver’s account if they are unable to do so themselves.

“Many people mistakenly believe that savings providers can simply liaise with a saver’s representatives without a PoA, which is not the case.”

The research also indicated that 74% of savers without PoA arrangements mistakenly thought they had measures in place in the event of mental incapacity or illness, with 60% believing they were covered because they have set up a will.

Paragon also found that 43% had filed all their documents in one place to assist friends and relatives in managing their finances.

“Often, the representative of savers who are unable to look after their own finances need access to their money quickly,” Williams added.

“For example, they may need to pay for care. Without a PoA in place, this can elongate the process as they will need to obtain a Court of Protection deputyship order, which can take time.”

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