Third-party mandate or power of attorney: which lets someone manage your money

If you want a relative or friend to help run your bank account, there are two routes, and they are not interchangeable. A third-party mandate is a form your bank keeps on file that lets someone you trust operate your account. A power of attorney is a legal document that gives someone the authority to make financial decisions for you¹.

The difference that matters most is what happens when your health changes. A third-party mandate ends when the account holder loses mental capacity, and it should stop working immediately². A lasting power of attorney is designed to carry on after that point. An ordinary power of attorney does not: it is only valid as long as you have mental capacity, and for financial affairs⁴.

So the choice usually comes down to timing. A mandate suits a short period, an illness, a hospital stay or time abroad, while you can still make your own decisions. A power of attorney suits anything longer, or anything where you want cover for the future. If neither is in place and someone loses capacity, a power of attorney or Court of Protection order is needed for someone else to manage the account¹.

Third-party mandate or power of attorney: how each one works

A power of attorney is a legal document that gives a third party the authority to make financial decisions for someone else¹. It enables you to choose one person, or more than one, called an attorney, to deal with your property and affairs¹⁰. Where more than one attorney is appointed, the document states whether they must act jointly, meaning together, or jointly and severally, meaning independently².

A third-party mandate works differently. It is a document telling your bank that someone you trust is allowed to run your personal accounts⁵. It gives that person the authority to run your bank account, but no other financial arrangements⁶. The person you nominate can usually take out money, make payments and make other transactions in your name¹¹. The account stays yours and does not become a joint account, and the person helping you can have their own card and PIN¹¹.

The two are not alternatives in the way people often assume. A mandate is a bank's own administrative form. A power of attorney is a legal instrument that exists independently of any bank. That is why some banks ask for both.

A will is sometimes confused with a power of attorney. A will is only effective on your death and has no legal authority before that point, whereas a power of attorney is effective while you are alive and allows others to act on your behalf during your lifetime¹².

A mandate lasts only while you can still manage your own money

This is the single most important limit. Third-party mandates end when the account holder loses mental capacity². The mandate should stop working immediately if you lose your mental capacity³. One bank's terms put it plainly: the mandate becomes void if the account holder or third party loses mental capacity, or on the death of either⁷.

The same condition applies to the person you nominate. They need to have mental capacity, and if either of you loses it, the authority is no longer valid and will be cancelled¹³. A third-party authority only lasts as long as both parties are alive and have mental capacity¹³.

There is also a time limit on some arrangements. A third-party mandate is only in place for one year on some products, after which you would need to renew it⁸. Mandates are usually only for a short amount of time¹⁵. Others run for a defined period or until further notice¹⁶.

Two further limits catch people out. You cannot transfer a third-party mandate to another account or bank, so moving means starting again⁵. And the bank does not have to agree to allow a third-party mandate at all¹¹.

Power of attorney and Court of Protection orders when you cannot manage your account

Power of attorney gives one or more persons the power to manage your finances if you are unable to³. There are three types of power of attorney, depending on what your needs are¹⁸. The one that survives loss of mental capacity is the lasting power of attorney. An ordinary power of attorney stops being legal authority if the donor loses mental capacity¹⁷. A power of attorney ceases if you become mentally incapable of managing your affairs, while an enduring power of attorney will continue¹⁰.

You cannot arrange a power of attorney for someone else, but you can help them through the process¹⁸. That distinction matters: the document has to be made by the person whose affairs it covers, while they still have the capacity to make it.

If someone loses capacity without a valid lasting or enduring power of attorney, a power of attorney or Court of Protection order is needed for someone else to manage the account¹. The court appoints an individual, individuals or a corporate body, called a deputy, previously known as a receiver¹⁹. In Northern Ireland the equivalent is called a controller, and in Scotland a guardian is granted a guardianship order¹⁹. This is a court process rather than a form, so it takes longer and involves the court's oversight.

Once a power of attorney or Court of Protection order is in place, some providers will accept applications made on the person's behalf. NS&I, for example, states that you can apply on behalf of someone else under a power of attorney or Court of Protection order²⁰.

What banks accept: first direct, Nationwide, AIB and Zempler

Banks differ in what they will accept and what the person helping can do. All banks should offer a third-party mandate⁵, but the terms are set by each firm.

For mortgages the position is narrower. With a third-party mandate on a mortgage, the person you choose can only get information about your account to help you manage it, and cannot make changes⁹. On some mortgage arrangements, a representative can only view the outstanding balance and request statements²².

AIB, Barclays, HSBC, Lloyds, Metro Bank, Monzo, NatWest group, Nationwide, Northern Bank, Santander, Starling Bank, the Co-operative Bank, TSB and Virgin Money are the fourteen banking groups covered by the Payment Systems Regulator's APP scams performance reporting direction²⁴. That is a reporting requirement, not a statement about how each handles third-party access.

Why banks can ask for a mandate form even with a power of attorney

This is one of the most common sources of frustration, and the answer is administrative rather than legal. A third-party mandate may also need to be completed if you have obtained a power of attorney or Court of Protection order, so the bank can obtain the attorney's personal details and specimen signature⁶.

In other words, the power of attorney establishes who has authority. The bank's form records who that person is on its own systems, and gives it a signature to check against. The FCA's banking conduct rules treat an attorney obtaining access to the account as a form of third-party access, which is why banks have a process for it²⁵.

Some organisations have different policies for dealing with a third-party authority, and some may not accept a general letter of authority, so it is worth asking the organisation for a third-party mandate form²⁶. Where a bank asks for certified copies of documents, that is a separate step again.

Setting up third-party access with your bank

The account holder sets it up, not the person helping⁹. The person you are helping needs to fill in a form giving you permission to manage their account, known as a third-party mandate, and most banks have one on their website²⁶. You can specify how much access to give²⁷.

For savings, the third party will need to complete and sign a third-party mandate form along with the account holder. For mortgages, a third-party mortgage authority form is completed with the third party's details and signed by the borrower. Two forms of ID from the third party are needed for both¹⁶.

1. Ask your bank for its third-party mandate or third-party authority form.
2. The account holder completes and signs it, specifying the level of access.
3. The nominated person provides identification, usually two forms.
4. The bank records the arrangement and issues any card or access the account holder has agreed to.
5. Diarise any renewal date, since some mandates run for a set period.

If you need to manage more than one account, or to manage someone's finances for a long time, a power of attorney may be needed instead²⁶. A mandate covers one bank account and no other financial arrangements⁶.

Cancelling a mandate, and what happens on death

A mandate 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 writing⁷. Some banks also reserve the right to revoke a mandate at any time, for any reason⁷.

Both power of attorney and third-party mandate rights cease on sole accounts once the account holder has passed away²³. After a death, the attorney should get in touch with the Office of the Public Guardian and send the power of attorney document, any certified copies and a copy of the death certificate²⁸.

A lasting power of attorney can be cancelled at any time while you have mental capacity by sending the original document and a deed of revocation to the Office of the Public Guardian²⁷. To cancel an enduring power of attorney before you lose mental capacity, you make a deed of revocation stating that you are cancelling it and keep it with the form, signed by you and a witness²⁹.

Bankruptcy has its own rule: any power of attorney you have for another person is cancelled³⁰.

Where the protection stops, and where to get help

The protections around these arrangements are procedural rather than financial. The Financial Services Compensation Scheme covers deposits when a bank fails, but it does not cover a dispute about who is allowed to operate an account³¹. What protects you instead is the bank's complaints process and, beyond it, the Financial Ombudsman Service.

If a bank will not accept a power of attorney, or handles it badly, you can complain. The ombudsman can order a bank to refund overdraft fees or interest, pay out a cheque the bank did not honour, return money paid to the wrong person, or pay compensation for distress or inconvenience³². Where an application for a basic bank account is refused, the institution must tell the consumer in writing and free of charge why, and advise them of the right to complain to the Financial Ombudsman Service³³.

There is a limit worth knowing about on the mandate side. A third-party mandate does not give the person the legal right to make decisions about the other person's finances⁵, so if a dispute arises about what they were entitled to do, the mandate itself is a narrow document.

Free, impartial help is available. MoneyHelper and the charities that give debt and money advice can explain the options, and the Financial Ombudsman Service is free to use. Macmillan covers managing money during treatment³.