Archived - Backgrounder: Voluntary Commitments by Banks on Powers of Attorney and Joint Deposit Accounts

What Does the Voluntary Commitment Do?

In Economic Action Plan 2014, the Government made a commitment to require enhanced disclosure by banks on the cost and benefits of using bank powers of attorney and joint accounts and more robust bank processes and staff training.

Eight major banks are voluntarily committing to make available to clients more information about powers of attorney and joint deposit accounts for those clients who want to give someone else the authority to do banking for them. The Canadian Bankers Association has also committed to the voluntary commitments on behalf of its smaller member banks.

When Do Clients Use Powers of Attorney and Joint Deposit Accounts?

There could be a number of reasons why a client might ask someone else to manage their financial affairs through a joint account or power of attorney arrangement, e.g., the individual is experiencing difficulty conducting their own affairs, possibly due to being temporarily out of the country, a physical impairment, or preparing for possible future impairment.

Some seniors may ask for help in managing their banking affairs, and put arrangements in place for a power of attorney or joint deposit account.

What Is a Power of Attorney?

A power of attorney is a legal form that a client signs to give one or more persons the authority to manage money and property on the client’s behalf. The person with the authority is called an “attorney”—the person does not have to be a lawyer.

What Is a Joint Deposit Account?

Joint deposit accounts are bank accounts in which two or more people have ownership rights over the same account to deposit, withdraw, or deal with the funds in the account, no matter who puts the money into the account.

What Is the Risk?

In relying on others, clients are more vulnerable to financial abuse if the power of attorney or joint deposit account is not set up with care.

What Is the Role of the Bank?

Banks are asked to follow their clients’ instructions if a client wants another person to act for them in their banking arrangements.

However, as banks are often seen as a trusted authority, it is important to ensure that they have the appropriate and adequate processes and procedures for managing these matters. Also, it is important that clients, and the person they rely upon, receive adequate information about how the bank is managing these matters.

Certain banks may make available to their customers a power of attorney form that has been produced by the bank covering the clients’ banking arrangements—this is known as a bank-form power of attorney.

The banks are committing to provide more information on powers of attorney. This means banks will provide disclosure of general information about powers of attorney and joint deposit accounts. For example, the bank will provide information to the senior that there is a risk that if the senior sets up a joint account with a joint holder, the joint holder might use the funds in the account for their own purposes, without the consent of the senior.

Alternatively, the banks could provide their clients with the brochure What every older Canadian should know about: powers of attorney (for financial matters and property) and joint bank accounts, which describes the advantages and risks of these arrangements.

Also, banks will provide information about the minimum requirements for an account to operate under a power of attorney. This means the bank will provide information on the requirements for a client or attorney to meet in order for the bank to act on their instructions, e.g., that the client or attorney may need to provide the original power of attorney or a notarized version, as well as proper identification.

Banks also commit to providing this information in a manner that is clear, simple and not misleading.

If the bank needs to review the power of attorney to ensure it meets legal requirements, the banks are committing to inform the client or attorney that a review is required and provide a general timeline for the review, other than where there is the potential for financial abuse of the senior or illegal activity.

If there is a dispute where a bank refuses to act on a power of attorney, the bank will provide information on its dispute resolution process to help the client and attorney escalate and resolve their concerns.

If a bank should offer its own form of a power of attorney for a client to use, the bank will not require that such a form be used and will indicate that a client may obtain a power of attorney from other sources, including from legal professionals.

As well, the bank will provide information that using the bank’s form could impact pre-existing powers of attorney and will indicate to the client that advice from a legal professional may be beneficial.

The voluntary commitments will be implemented in phases. The banks will implement the provisions of the voluntary commitment related to disclosure of the required information about powers of attorney and joint accounts:

• On their websites by September 1, 2014;
• In their branches by December 31, 2014.

The banks also are committing to provide staff dealing directly with clients and attorneys with training to increase their awareness of the bank’s policies and procedures related to disclosure of the required information; and the resources available within the bank to assist staff with more complex issues.

Implementation of staff training will begin March 31, 2015, and continue on an ongoing basis.