Online-only bank? Check your LPA
It seems as though “challenger banks” are everywhere at the moment. Not only are they breaking the mould of traditional high street banking, they are luring in customers with very attractive interest rates. Their strategy seems to be paying off, as people join in their droves - and if you are one of them, take care with any legal documentation.
What is a challenger bank?
Generally, these are smaller retail banks that can offer more attractive incentives than well-established national banks. There are often quirks, for example, most are online or app-based only, but in return they will offer much better rates on savings or loans.
I was reading an article in the Times over the weekend about how one of these challenger banks, Chase Bank, had left a customer in a bit of a pickle. Due to the fact it was online only, he needed to attach his savings account to a debit card in able to transfer funds. No problem. Except when this customer discovered the account he thought was a savings account was actually a current account and that the card he thought was using as a debit card had insufficient funds.
He then discovered, in his confusion, he’d transferred his savings to his debit card account by accident, where it was earning no savings interest, instead of the attractive 1.5% rate that he should have received on his savings account. There was the princely sum of £60,000 in there, so even at 1.5%, the customer would have received around £900 by the end of the year. Very disappointing.
Why is this important?
Well, it tells us not only should you be on your guard where new money products are concerned, it also made me think that if this young man got easily confused, how difficult would it be for someone more vulnerable to understand such complicated rules.
What’s more, if that person was to open an online-only bank account, and then lose mental capacity later on due to illness or sudden accident, there can be difficult things to navigate in the eyes of the law.
Attorneys - be on your guard
If you have a Lasting Power of Attorney (LPA), it enables someone nominated by you, the donor, to take care of your affairs in the event that you are unable to do so yourself. If the donor becomes too ill or loses mental capacity, the attorney steps in to act on the donor’s behalf. There are two types of LPA - medical, which expresses wishes you may have relating to treatment you’d like to receive, and a financial, which enables your attorney to access your bank accounts, pay any bills you may have or access anything else the donor may hold.
It’s the financial LPA which is important in the instance of challenger banks. Often they do not issue bank statements by post, so an attorney might not even know that they exist. If the donor has investments locked up in there, these could mean the difference between being able to pay for treatment or care home fees, or struggling to make ends meet.
What do you think you own?
Of course, it’s not just challenger banks that attorneys need to be aware of. We wrote a blog recently about online assets that are often over looked such as eBay, PayPal and even your National Lottery account. There are probably more things than you realise, other than just physical assets, that need to be accounted for when it comes to an LPA - and your will too.
It really is very important that you tell loved ones about any assets you have and keep conversations open about how you use them, as well as any savings or investments you might have.
If you would like any further advice, contact the Private Client team at Downs Solicitors to see how we can help.