Third party mandate on a bank account vs a Lasting Power of Attorney

In this article we explain the difference between a third party mandate and a Lasting Power of Attorney. If you need any advice with making a lasting power of attorney we are here to help.

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What is a third party mandate?

A third party mandate is a formal instruction from you to your bank or building society telling them that you would like another party, i.e. someone else, to have authority to carry out everyday banking transactions on your behalf.

It will usually require the completion of a simple form directly with your bank and a visit in person to show you are capable of signing the form. The third party may then need to identify themselves to your bank and sign certain papers to verify their signature.

This instruction is only valid whilst you have mental capacity and are able to make decisions for yourself. If at any point you lose the capacity to make decisions about your property and financial affairs, this third party mandate will no longer be valid. 

Learn more about a power of attorney solicitor can support you.

So whoever you have appointed to deal with your bank account will no longer be able to carry out transactions on your behalf. If they continue to do so they will be in breach of the terms of the mandate and could face distressing and sometimes costly accusation of fraud from the Bank or Building Society.

What is a Lasting Power of Attorney?

Lasting Powers of Attorney allow you to appoint someone (your ‘attorney’) to deal with your property and financial affairs whilst you have capacity, like a third party mandate, but a Lasting Power of Attorney will continue to be valid if you lose capacity.

Related reading: How a will and probate solicitor can help.

The person who you appoint as your attorney will be able to continue to manage your bank accounts and financial transactions, even if you have lost mental capacity.

A third party mandate is limited to whichever bank you set it up with and it rarely permits anything more than everyday transactions. A Lasting Power of Attorney over your property and financial affairs gives your attorney the authority to deal with not only your bank account but anything that is related to your property and finances.

For example, under a Lasting Power of Attorney, your Attorney can deal with any shareholdings that you may have, they can instruct a financial adviser to help ensure that your investments are managed correctly and they can help make decisions about selling your property if you need to release monies to settle your care fees.

Which one makes more sense for me?

As you can see, although a third party mandate can be useful and is often a very effective way to deal with temporary situations it is also limited and can sometimes be insufficient to cover the circumstances you may find yourself in.

A Lasting Power of Attorney however, could be more advisable if you want something to cover all of your financial affairs or to continue past the point when you become unable to manage your own affairs.

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