POWERS OF ATTORNEY
Powers of attorney are used throughout the financial services industry in a variety of scenarios from authorising individuals to carry out activities for a firm to acting on behalf of private individuals who are incapable of managing their own affairs.
When a client becomes incapable of managing his own affairs, it has serious ramifications for the administration of any investments. An understanding of the background and rules surrounding what happens when someone becomes incapable is therefore essential when managing investments for private clients.
In this chapter we will take a detailed look at some key features of how an individual's financial affairs are dealt with once an individual loses mental capacity, review the changes that will take place in 2007 as a result of new legislation and consider the ramifications for investment administration.
When a client uses the services of an investment firm he will usually enter into some form of agreement for the provision of investment management or investment administration services.
By signing the agreement, the client authorises the firm to undertake certain agreed activities on his behalf. What it is essential to appreciate is that the authority to act on behalf of the client can continue only so long as the client can change his mind and cancel the contract or agreement. Once a client becomes incapable of managing his own affairs, the authority to act ceases and alternative ...