The adviser should generally treat the attorney as the authorised instructing party when the power of attorney is valid, current, and authorises the transaction. ASIC and the Code of Ethics do not require advisers to refuse instructions solely because the attorney is also a beneficiary. However, a transfer that benefits the attorney personally is a higher-risk transaction that requires enhanced scrutiny. The adviser should verify authority, assess whether the instruction appears consistent with the principal’s interests and legal authority, and consider indicators of financial abuse, undue influence, incapacity, fraud, or unauthorised conflict transactions. The adviser should not proceed where there are reasonable concerns about misuse of authority or where the attorney’s authority to undertake the transaction is unclear.
Expanded Answer
The regulatory position is that authority comes from the power of attorney, not from the attorney’s status as a beneficiary. An adviser may generally rely on instructions from an attorney where the power of attorney is valid, operative, and broad enough to cover the relevant asset, account, or transaction. The existence of a personal benefit to the attorney does not automatically invalidate the instruction.
The adviser’s role is not limited to confirming that a power of attorney exists. ASIC expects advisers and AFS licensees to maintain appropriate controls to identify misconduct, fraud, conflicts, and client harm. The Financial Planners and Advisers Code of Ethics also requires advisers to act with integrity, exercise professional judgement, consider client vulnerability, manage conflicts appropriately, and place the client’s interests at the centre of decision-making. These obligations become particularly important where an attorney directs funds to themselves.
Key considerations:
Applies when:
The power of attorney is valid, current, and authorises the transaction.
Enhanced scrutiny applies when:
The attorney receives a personal benefit from the transaction.
Do not proceed without further review when:
There are indicators of financial abuse, undue influence, fraud, incapacity concerns, disputed authority, or an unauthorised conflict transaction.
Common red flags include unexplained transfers, unusual urgency, resistance to providing supporting information, significant depletion of the principal’s assets, inconsistent instructions, concerns raised by family members, or transactions that appear to provide little benefit to the principal. In these circumstances, advisers should seek compliance or legal guidance before acting.
For additional guidance on powers of attorney and authority verification, see How can I know that a power of attorney is current and valid?
Why it matters
Transfers that benefit an attorney personally are a common source of complaints, family disputes, allegations of elder abuse, and regulatory scrutiny. An adviser who fails to identify warning signs may expose the client, the AFS licensee, and themselves to significant legal, remediation, and reputational risks. Equally, refusing to act without a proper basis may prevent legitimate transactions authorised by the principal.
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Practical guidance
- Review the power of attorney and confirm that it authorises the specific transaction and asset involved.
- Investigate and document the purpose of any transfer that provides a direct benefit to the attorney.
- Escalate the matter for legal or compliance review where authority, capacity, conflicts, or potential financial abuse concerns are identified.
Further reading
How can I know that a power of attorney is current and valid?
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