As reported by STEP, the Public Guardian is to review its new guidance concerning delegation of investment decisions to discretionary fund managers.

In Part A7 (page 28) of the guidance that the OPG gives relating to LPAs, the OPG states that unless the LPA gives express power to use discretionary management schemes, an attorney must apply to the Court of Protection to allow the use of a discretionary fund manager.

This was new and represented a change from the OPG’s previous position. Practitioners were concerned and made representations. Hence the announcement of a review and the possibility of a test case.

It would be anomalous if donees of LPAs had to have court approval for using such a ubiquitous form of investment. Trustees can do so pursuant to sections 11 and 15 of the Trustee Act 2000. As regards the position of agents generally (and the donee of a LPA is no more than an agent whose agency survives the incapacity of the donor and is subject  to  the  court’s  control  under  the  MCA) Bowstead  and  Reynolds  on  Agency  20th    Edn Article 34 states that an agent may delegate:

Where, from the conduct of the principal or of the principal and the agent, it may reasonably be presumed to have been intended that the agent should have power to employ a sub- agent”

An echo of the guidance can be seen, however, in what Senior Judge Lush said in Northamptonshire County Council v RG and others [2015] EWCOP 66 (noted in the November 2015 newsletter) at paragraph 43:

Attorneys cannot usually delegate their authority to someone else. They  must carry out their duties personally. Of course,  they may seek professional or expert advice when appropriate (for example, investment advice from a financial adviser or legal advice from a solicitor), but  they cannot as a general rule allow someone else to make a decision that they have been appointed to make”.

It is to be hoped that donees of LPAs will be able to use discretionary investment schemes without the need for court sanction. Otherwise, every time an investment manager wants to make a change in a portfolio, he will have to get the attorney’s consent or the Court of Protection will have to make orders in any case where, quite reasonably, an attorney wants to use a discretionary fund. Indeed the guidance seems to suggest that court approval is needed even for the attorney to continue to use such funds.