The Federal Attorney-General Department released a consultation regulation impact statement (RIS) a few days ago which considers options for reform to Enduring Powers of Attorney (EPOAs) on a national basis. The RIS considers options for streamlining access to information about EPOAs all with the intention of reducing uncertainty regarding whether a document, as presented by someone e.g. an attorney, can be relied upon as the basis for financial transactions.
The Council of Attorneys-General which comprises attorneys-general from Australian government and all States and Territories will be considering this issue at the first Council of Attorneys-General meeting this year.
The RIS notes that financial abuse is believed to be the most prevalent form of elder abuse – particularly for older Australians. The Australian Law Reform Commission recently found that the mis-use of EPOAs, while not robustly quantified, is of sufficient volume to warrant intervention.
The law concerning powers of attorney is State-based. In all Australian States and Territories an individual (the principal) can assign authority to another person to act on their behalf as attorney. An attorney that continues beyond the point where the principal has lost capacity is referred to as an “enduring power of attorney”. These types of documents are a creature of statute.
However, financial institutions continue to report concerns with the veracity of an EPOA document produced and whether it can be relied upon to make financial decisions. There is no easily accessible, nationally consistent, source of data which organisations like banks can use to determine if an EPOA is current and valid – an essential step in determining whether a transaction or decision can be validly made.
It follows that this “looseness” is effectively facilitating a considerable degree of elder-abuse it is thought because of difficulties in knowing if the document supporting a transaction is valid.
The RIS identifies 3 options to address the problem; namely:
- status quo: no change to be made to the current regulatory framework;
- regulatory option: this option proposes the introduction of a mandatory registration requirement in order to establish a comprehensive, national data source able to be searched by approved third parties to confirm the existence and currency of an EPOA; and
- non-regulatory option: under this approach the Australian government proposes to facilitate registration of EPOAs in a central location but with registration being entirely voluntarily.
The RIS estimates that the costs of the regulatory option is somewhere between $3M to 8M to build the register with ongoing costs of between $6M to 57M. For the non-regulatory option, the cost is estimated at somewhere between $2M to $43M.
It should be noted that at the present time all States and Territories, other than Victoria, require an EPOA to be registered with the State’s Land Titles Office if a transaction involving land is going to be effected by reliance on an EPAO. Victoria currently has no registration requirements at all.
The RIS makes the point that, under this approach, all new EPOAs would be required to be listed within a national electronic EPOA register in order to be validly made. This approach will require State and Territory legislation to be amended to reflect the new registration requirement.
The benefits of the regulatory approach are suggested as:
- increased ability for investigations into legitimacy of transactions purported to be made under a current EPOA;
- greater visibility to governments of the number of EPOAs in place;
- greater ability to interrogate data to understand the most commonly used characteristics of EPOAs in order to support future policy design (examples of this are how many attorneys are generally appointed and the conditions on exercise of an EPOA regularly specified);
- improved EPOA making as invalidly made EPOAs have a higher chance of being identified through the registration process; and
- it may remove the requirement to provide physical copies of EPOAs at the time when each transaction is requested.
Submissions on the RIS are due later this month. National power of attorney reform has been on the agenda by States’ Attorneys-General now for many years. The differences between States is often exacerbated by the free movement of people and reform in the area is well overdue.
We will be following developments in this very important area of reform.