This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members consider whether or not they can take on a Power of Attorney role and the ethical consideration to make prior to taking such a position.

Members may also wish to refer to the following related guidance:

• Can I be a trustee/director for my non-audit client
• Anti money laundering client due diligence
• Working with vulnerable clients

There are different types of legal appointment over an individual’s affairs: a Power of Attorney (PoA) or a Deputyship.

Broadly speaking, these roles are similar; the main difference is that a PoA is set up via an agreement whilst the subject has capacity, whereas a Deputyship is set up by the Court of Protection subsequent to the subject losing capacity.

There are 2 main types of PoA - a lasting power of attorney (LPA) and an enduring power of attorney (EPA).

It is important to understand the differences between these, and which role your client requires and/or is asking you to fulfil.

Lasting power of attorney (LPA)

A lasting power of attorney (LPA) is set up by an individual (a donor) when they have mental capacity. They appoint attorneys to assist them in making decisions or make decisions for them where they are unable to do so.

LPAs may be for financial decisions (e.g. dealing with tax affairs, buying and selling of property, operating a bank account) or for health and care decisions (e.g. where the donor should live, decisions about medical treatment).

Donors may authorise one or more attorneys. Where more than one attorney is appointed, the donor will need to determine whether decisions are to be made jointly and severally, jointly or a mixture depending on the decision to be made.

Donors may authorise attorneys to have power to make decisions as soon as the LPA has been registered, or only when they don’t have mental capacity.

Donors may also include instructions in the LPA which may restrict or limit the powers of one or all attorneys.

Enduring power of attorney (EPA)

Enduring powers of attorney (EPAs) are similar to LPAs although can only authorise an attorney to make decisions about the donor’s property and financial affairs. It is no longer possible to register a new EPA due to LPA’s replacing EPA’s in October 2007.

EPAs could only be registered once mental health begins to deteriorate.

LPAs offer greater protection as they can make decisions before and after you lose mental capacity, while EPAs focused solely on the financial estate of the person no longer able to manage their own affairs.

Further details and guidance on Lasting Power of Attorney (PoA) can be found on the gov.uk page Lasting power of attorney duties.

Further details and guidance on Deputyships can be found on the gov.uk page Become a deputy.

As with PoA’s it is important to understand the role your client requires and/or is asking you to fulfil, in order to assess whether you can do the role, and also, want the role.

One or more deputies may be appointed where an individual lacks capacity and there is no LPA or EPA in place. Deputies are usually close relatives or friends of the person who needs help making decisions. Applications must be made to the Court of Protection for the appointment of deputies.

Where there is more than one deputy, the Court of Protection will authorise them to make decisions jointly and severally or to together (joint deputyship).

On appointment, the Court of Protection will send a court order detailing what can and can’t be done by the deputies.

Deputies must send an annual report to the Office of the Public Guardian (OPG) each year explaining the decisions they have made.

Objectivity

The Code of Ethics section 280 requires that an ICAEW member maintains objectivity for all services provided.

When a PoA or Deputyship commences, members would need to consider whether this creates threats to their objectivity in relation to any other accountancy services they are already providing to that client.

Similar consideration regarding objectivity would be considered when taking up a trustee or director position in a client, guidance on which can be found in the helpsheet Can I be a trustee/director for my non-audit client.

Auditors

As well as the Code of Ethics, auditors are required to comply with the FRC Ethical Standard and be independent of the client.

The FRC has published a staff guidance note on the ethical implications of a Power of Attorney (SGN 04/2016). Whilst this does not address a Deputyship, similar implications would apply here too.

Audit firms need to ensure that they place a requirement on their staff to notify the firm of any PoA or deputyships they (or persons closely associated to them) hold, and the point at which they come into force, so that the audit firm can take necessary action, or provide staff members with appropriate advice to avoid these roles resulting in a breach of the Ethical Standard.

In putting into place appropriate policies, audit firms need to consider that the independence of the holder of a PoA or Deputy, which has not yet been activated, may still pose a risk of a breach because that individual may be perceived to have a growing ability to influence the way in which the assets held under a PoA are invested.

Client money

ICAEW Client Money Regulations do not permit a client account to be used as a banking facility. The most appropriate option therefore would be to operate the clients own account while carrying out duties under the PoA.

Safeguards would need to be applied to operating a clients own account under the PoA as the client will not be in a position to authorise transactions.

This would be a similar situation under a deputyship, although possibly more clear safeguards are apparent in this case as all actions and transactions would need to be for the purpose of satisfying the court of protection.

Guidance is available on operating a clients’ own account.

Where the client has a PoA or Deputy, the attorney or deputy does not become the client. Their role is to assist the client (the donor) in making their own decisions, or where they are unable to do so, to make decisions on their behalf.

Where the client has made a PoA, he or she remains the client acting through their agent.

A deputy appointed by the Court of Protection, will be acting on behalf of the person for whom they act, who lacks mental capacity, as a statutory agent.

Under both circumstances, duty of care is to the person on whose behalf they act.

From an AML perspective, CDD would need to be completed on the individual exercising the power of attorney (the representative of the client) and also the person they are exercising that power on behalf of (the client). Firms will usually be informed (either by the donor, an attorney or deputy) of the existence of such an arrangement.

Where such an arrangement is in place, it would be sensible for firms to make a search of the relevant register to confirm details and gain an understanding of the powers any attorney or deputy holds. This can assist a firm in establishing authority to act for the client.

You can check the validity of the power of attorney for LPAs registered in England and Wales using the free Find out if someone has an attorney or deputy acting for them facility of the Office of the Public Guardian.

A new service is also available for LPAs registered in England and Wales on or after 17 July 2020. The donor or an attorney can provide the LPA access code which can then be used with the view a lasting power of attorney service to access the information about the LPA.

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Ethics Advisory Service on +44 (0)1908 248 250 or via webchat.