Cyber security and the fall out from Brexit will continue to dominate the priorities of organisations throughout 2019. Whilst firms are rightly focused on mitigating the risk and impact of cyber attacks, and analysing any changes to their products post Brexit, there is another area that we would suggest they get on top of sooner rather than later - that is their procedures for Bereavement, Guardianship and Powers of Attorney.  This is particularly so following the final notice issued by the FCA to Santander UK plc on 19 December 2018 in which they were fined £32.8 million for failures in their bereavement processes and procedures.

As the FCA state in the final notice:

A bank is required to have an effective process for dealing with a deceased customer’s accounts and investments from notification of death to the transfer of funds to those who are entitled to receive them.

The FCA accepts that bereavement processes have and continue to be an industry-wide challenge. In the case of Santander, the FCA found serious failings in their process which ultimately led to it being flawed.  The fine reflected that over 40,000 customers were directly affected, never mind the stress, detriment and inconvenience suffered by those representing the deceased.

We have identified five areas that firms should address in 2019 to meet the challenges identified by the FCA in its final notice:

 Vulnerability

This is perhaps stating the obvious, but firms should already treat vulnerable customers fairly. It's worth flagging that not all individuals contacting a bank about bereavement, powers of attorney or guardianship will be vulnerable. That said, it's useful to keep the FCA's definition of a vulnerable consumer in mind:

A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

Firms should be familiar with the British Banking Association (BBA) report on Improving outcomes for customers in vulnerable circumstances. The Financial Services Vulnerability Taskforce was set up to implement the seven principles set out in the report. In terms of the progress being made, firms should consult the Lending Standards Board's review of progress towards implementation: see Summary Report.

Bereavement Principles

The Bereavement Principles published by the BBA in February 2016 set out how firms should deal with representatives of the deceased and next of kin. If you've lost a loved one you shouldn't be forced to go through multiple painful conversations to tell different teams in one organisation. Ideally, one notification should be enough. In addition, relatives don't want to be receiving letters marketing products to the deceased. The bereavement principles are designed with these real-life experiences in mind. They aim to improve bereavement processes and mitigate detriment.

Death Notification Service

The Death Notification Service builds on the 'Tell us Once' idea found in the Bereavement Principles. The service is an online tool that allows you to notify multiple financial institutions of a death in one notification. The service has been up and running since 2018.

Third Party Access Principles or Principles to Improve Customer Access

The Third Party Access Principles should make it easy for friends and family to support a firm's customers. For example, if you are appointed as an attorney and you're dealing with the financial affairs of another person it can be quite daunting. On top of that you may feel that banks and financial institutions are making it hard for you to meet your duties as an attorney. You could find yourself thwarted by process and paper trails.

In order to balance legal requirements with the customer and representative journey, the industry has come together to agree how access should be dealt with. The third party access principles cover the legal instruments (powers of attorney, guardianship orders etc) and the form that will be accepted (whether original or certified copy) through to a commitment from organisations to have consistent information on third party access which is relevant and up to date. Full implementation of these principles is due in March 2019.

Guardianship for missing persons

Also on the cards for 2019 is the implementation of a new form of guardianship in England and Wales. The Guardianship (Missing Persons) Act 2017 received Royal Assent on 27 April 2017. Shortly before Christmas 2018, the Ministry of Justice issued a consultation on the proposal to implement the legislation in July 2019.

In simple terms, if someone goes missing their property become ownerless. In the absence of a court order, in the majority of cases there would be no one with the legal authority to manage the affairs of the missing person, i.e. operating their bank account and cancelling direct debits. This can lead to legal and financial problems, especially for the dependants of the missing person.

The legislation creates a new type of guardianship – the guardianship of the property and financial affairs of a missing person. Banks and financial institutions should prepare by updating missing persons and guardianship procedures appropriately, and by briefing staff on those procedures.

Now get going!

The start of the new year is not just a time for individuals to be focusing on their legal and financial affairs. Banks and financial institutions should be actively working on the challenges posed. Balancing customer outcomes with regulatory responsibilities and legal requirements is not easy. It is clear from the FCA's final notice to Santander that leaving issues such as bereavement processes on the "too difficult" pile is no longer acceptable. It might not be as shiny as launching a new product, but it is vitally important to take steps to protect your business and your customers.