How do I set up a bank account with a power of attorney?

Q. My mother-in-law lives with us. When the government stopped paying her pension into her Post Office card account, she could not find a bank that would open a new account because she had no proof of ID such as utility bills or a driving licence.
We arranged for her pension and disability allowance to be paid into the joint account I share with my wife. I am uneasy about this in case she has to go into a care home. We have a power of attorney, but do not know how to open an account in my mother-in-law’s name. If we cannot do that will our savings be taken into account if she has to go into a care home?Lee, address supplied
Dealing with the affairs of a relative or friend can be stressful and bureaucratic, as you have clearly experienced. I understand your concerns about the pension being paid into your account. The solutions are by no means straightforward but I have spoken to the government and leading charities such as Age UK to offer the best advice.
It can be a nightmare setting up a traditional bank account at the best of times. Many of the people I speak to have problems with providing photo ID if they don’t have a passport or driving licence. However, there are other forms of identification that are acceptable — and other types of bank account.
When the government changed the rules around paying pensions and benefits into bank accounts in 2021 it was also forced to acknowledge that many people were not able to have an account, for a variety of reasons.
As a consequence the sector introduced “basic” bank accounts. These have lower thresholds for proof of ID and credit scoring requirements and they do not come with overdrafts, credit facilities or other standard banking features.
It should be possible to open a basic bank account with a pension statement, particularly if you have a power of attorney that allows you to act on your mother-in-law’s behalf. In effect you will be providing the key identification requirements and simply proving your right to act for her.
However, many bank staff seem befuddled by such requests so it is important to stay calm and persist if you are told this is not possible. You can ask to speak to a more senior member of staff or someone who specialises in vulnerable customers. As an aside, this is one of the great tragedies about the decimation of the bank branch network. At one time you could walk into a bank and staff there would know exactly how to help you.
The Financial Conduct Authority (FCA), the industry regulator, said: “Banks and other account providers have been urged to increase awareness of basic bank accounts, which allow people to make and receive payments but without the availability of an overdraft. The FCA found that several providers could make it easier to apply for one.”
There is a great deal of helpful advice on setting up an account on the free Money Helper website. The MoneySavingExpert website has a guide to the best banks when you have a power of attorney.
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If you cannot open an account, you can apply to use the Payment Exception Service. This allows people to collect benefits or the state pension from a Post Office or shops with a PayPoint service.
To do this you will need to be sent either a payment card or voucher code by text message or email. Details of how to do this can be found on gov.uk.
The good news is you can become an “appointee”, which gives you the right to manage another person’s benefits. This process can also be found on the government website, or search online for “becoming an appointee for someone claiming benefits”. This being a government initiative, it is not straightforward. There are different departments to contact depending on the benefit in question. In this case you will need to contact the Pension Service.
It goes without saying that a number of steps will need to be followed to assess whether it is appropriate and safe to allow you to do this. The Department for Work and Pensions (DWP) will arrange a visit to assess whether the request to be an appointee is needed (you can discuss this in advance with the DWP to save time). It will interview you to make sure you are suitable.
During the interview you will need to fill out an application form and if you are approved, you will be sent confirmation and the means to collect the payments. The DWP will monitor the situation for as long as it is in place.
If your mother-in-law does need care your local council will complete a financial assessment to decide how much she will need to contribute. This assessment will look at her income, including pensions and benefits, and capital, such as savings. If she has any joint capital, such as a joint savings account in her name, a local authority would typically treat 50 per cent of those funds as belonging to your mother-in-law. Funding assessments for care are notoriously difficult to navigate and can vary between councils.
Martyn James is a consumer rights champion, covering everything from energy bills to cancelled flights and pothole claims