Sending a letter of authority so someone can speak for you

A letter of authority is a short written permission that lets someone you trust ask a company for information about your plan or account. It is the lightest of the arrangements for involving another person in your money, and it is deliberately narrow: as Zurich puts it, "A letter of authority does not allow that person to act on your behalf or make any decisions, only to access information"¹. If you want someone to actually run an account, move money or make payments, you need a third-party mandate or a power of attorney instead.

The letter is common in pensions and investments, where an adviser needs plan details before giving advice, and in complaints, where a relative is chasing a firm on your behalf. The Information Commissioner's Office, which handles data protection complaints, says that if you are making a complaint on behalf of someone else "you need to prove that you have the authority to act for them", and a signed letter of authority is one of the ways to do that². The same principle applies to a request to object to the use of your information: someone else can submit it for you, but they will need to send proof they are authorised, such as written permission or a power of attorney document³.

There is usually no fee. The letter is a statement of your permission, not a product, and the work of setting it up sits with you and the firm. What it does not do is give the named person any control over your money, and it stops being useful the moment you lose the mental capacity to give permission.

A letter of authority lets someone see your information, not act for you

The distinction between seeing and acting is the whole point of the letter, and it is where most confusion starts. A letter of authority is a data-sharing permission. It tells a firm that you are happy for it to discuss your plan with the person named, answer their questions and send them statements or policy details. It does not authorise a single transaction.

That is why the letter is often the first step rather than the last. A financial adviser reviewing your pension needs the plan's charges, funds and transfer value before they can advise, and the letter unlocks that information without handing over control. Zurich's own form can be used "to allow a financial adviser to receive information about your plan"¹. PensionBee goes further and says it will provide information only in response to a valid letter of authority, and only from an FCA-regulated adviser, not from unregulated UK or overseas firms⁶.

The same logic runs through complaints. The Financial Ombudsman Service needs to know that the person contacting it is entitled to act for you. Where you still have mental capacity, you can give permission simply by naming the person on the signed complaint form, or verbally or in writing such as in an email, and no power of attorney document is needed⁷. Where you cannot give that permission, the ombudsman will need to see a copy of the power of attorney document, which can be a paper copy or, in England and Wales, an access code to view it online; an original or certified copy is not required⁷.

If the arrangement you actually need is one where the other person can pay bills, move money or manage the account day to day, the letter is the wrong tool. That is a third-party mandate or, where capacity is in question, a power of attorney.

Letter of authority or third-party mandate: sharing information or running your account

These two are often spoken about as if they were the same thing, and they are not. A letter of authority shares information. A third-party mandate gives access to the account itself.

A third-party mandate is a document telling your bank that someone you trust is allowed to run your personal accounts⁸. It gives that person the authority to run your bank account, but no other financial arrangements⁹. In practice that means everyday banking in branch or over the phone, such as making payments, or simply allowing the bank to disclose account information to them¹⁰. Some firms allow the mandate holder to issue cheques¹¹. What it does not cover is arranging a formal overdraft or opening or closing an account⁵.

A power of attorney is the heaviest of the three because it is a legal appointment, not a permission. It enables you to choose a person, or more than one person, called an attorney, to deal with your property and affairs¹². It survives your loss of capacity if it is a lasting power of attorney, which is exactly what the other two do not do.

What to include in a letter of authority

There is no single official form, so the contents are set by what the firm asks for and by what the person receiving it needs to prove. A workable letter carries your name and address, the account or policy number, the full name of the person you are authorising, what you are authorising them to see or discuss, your signature and the date.

Firms that publish requirements tend to be specific. The Financial Services Compensation Scheme asks for a letter confirming who you would like it to speak to on your behalf, including that person's name, address and email address, signed and dated by you within the last 12 months¹³. It also notes that where a personal representative handles correspondence, the claimant still has to sign the documentation¹³. Some organisations publish a sample letter you can adapt, such as a Word document for giving authority to a carer¹⁴.

Where a third party is asking for information rather than you volunteering it, the same rule applies from the other direction. The Scottish Public Pensions Agency says that if the request comes from a third party, such as an independent financial adviser, the member must provide a signed mandate authorising release of information before anything is released¹⁵.

A few situations need more than a letter. If someone is dealing with an estate, probate or letters of administration are needed where the estate is worth above a certain amount⁹. And where a trust is involved, the documents will include a letter of wishes setting out how trustees should help pay for care and improve quality of life¹⁶.

How to send it and when the firm can start talking to them

Send it the way the firm asks. Nationwide, for example, accepts the original document or a certified copy by post for an ordinary power of attorney and recommends using a secure service¹⁷. Many firms accept a scan or photograph by email, but that is their choice, not a right, and a firm handling sensitive information may insist on the post. Keep a copy of everything you send, and note the date.

Once the firm has the letter, it can deal with the person you named. There is no statutory waiting period for a letter of authority, and no rule that forces a firm to act within a set number of days. What does exist is a set of deadlines around complaints, which is where most of these letters end up. The Financial Ombudsman Service asks you to make a formal complaint to the company first, and if you do not get a final response letter within eight weeks, or you are unhappy with the response, you can bring the complaint to the ombudsman using its complaint form¹⁸. A case handler is then assigned to investigate and may ask for more information¹⁹.

If the firm will not deal with your nominated person at all, the route is a complaint, first to the firm and then to the ombudsman. The ombudsman service is free to consumers. For help with a stalled dispute before that stage, see free consumer advice, and for the mechanics of putting the complaint in writing, writing an effective complaint letter or email.

Third-party mandates: limits, renewal and cancelling

A third-party mandate is more powerful than a letter of authority, so its limits matter more. It gives access to your bank account, and you can specify how much access to give²⁰. It does not extend to your other financial arrangements⁹, and it cannot be transferred to another account or another bank²¹.

The term is set by the firm. Standard Life says a third-party mandate is only in place for one year, after which you would need to renew it²¹. Hodge says it will contact you one month before the authority is due to come to an end, to give you the opportunity to extend²². A third-party authority agreement only lasts while the donor is alive²³.

Cancelling is straightforward, and the exact method varies. Hodge allows you to end the authority before the expiry date by contacting it by phone or email²². Metro Bank says the mandate can be cancelled at any time²⁴. Marsden Building Society says it can be cancelled by either the account holder or the third party at any time, by written request handed into a branch or posted, or by phone followed up in writing²⁵. Chorley Building Society requires a written instruction from the account holder²⁶.

Two limits catch people out. The first is capacity: third-party mandates end when the account holder loses mental capacity⁵. The second is that a mandate is not a joint account. On a joint account, everyone named is equally responsible and can withdraw cash or spend whenever they like, and the bank could ask you to repay overdraft borrowing by another holder²⁷. A mandate creates no such shared liability, which is a protection for the person helping you as much as for you.

When your mental capacity changes

This is the point at which the lighter arrangements stop working, and it is worth understanding before you need it. A third-party mandate ends when the account holder loses mental capacity⁵. A third-party authority is cancelled if either the donor or the nominee loses mental capacity²⁸. An ordinary power of attorney is only valid while you have mental capacity, and it covers financial decisions only²⁹.

A lasting power of attorney is different. It is designed to continue, and the person granting it must have mental capacity, meaning they can make their own decisions, when they sign it³⁰. A power of attorney is only useful if someone is over 18 and has mental capacity³¹. That is why the advice is to put one in place while you can, rather than after capacity has gone.

Where capacity has already gone and no power of attorney exists, the fallback is a deputyship through the Court of Protection, which is a slower and more expensive route. The Financial Ombudsman Service can still deal with an attorney complaining on someone's behalf, and it will need to see a copy of the power of attorney document to check that the person is named as the attorney⁷.

For the wider picture, including how the rules differ across the UK, see powers of attorney explained, making and registering a lasting power of attorney, and the comparison of a third-party mandate or power of attorney.