A Lasting Power of Attorney (“LPA”) is a legal document which allows you to choose who should help you make decisions or make decisions on your behalf when you lose mental capacity and are no longer able to do so yourself. The person making the LPA is called the ‘donor’ and the person or persons given authority under the LPA are called ‘attorneys’. There are two types of LPA: one for ‘Financial Decisions’, for example paying bills or dealing with properties; and one for ‘Health and Care Decisions’ which can cover decisions from what type of care you receive to whether life sustaining treatment is given or not.

Recent UK-wide research by Which? (a survey of 2,000 people carried out in November 2021) has found that the general public has a poor understanding of LPAs and the Office of the Public Guardian, the government department responsible for registering LPAs (“the OPG”), is being urged to act accordingly. According to the survey, misconceptions about LPAs included:

  • That an individual loses access to their financial accounts once an LPA is registered (16% of respondents thought this);
  • That an LPA can be created at any point, when in reality an LPA cannot be created once a person has lost mental capacity (a staggering 77% of respondents thought this); and
  • 70% of respondents believing that as they were healthy, they did not need an LPA.

In addition, awareness and understanding of LPAs seems to be especially low amongst young people and those with lower incomes - 26% of people aged 18-34 and 20% of people who earn less than £21,000 did not know what an LPA was. In contrast to this, 7% of people aged over 55; and 10% of those who earn over £56,000 did not know what an LPA was.

The same research also found that attorneys often had difficulty dealing with banks under an LPA, with examples of issues encountered including banks losing LPA documentation, failing to properly explain the registration process and even not allowing the attorney full access to the donor’s accounts once registration has taken place.

Discretionary investment express provision

In 2015, the OPG’s guidance was amended to require that specific wording was included in an LPA if the attorney was to be able to use a discretionary investment manager to assist with the management of the donor’s assets.

Without professional assistance, many attorneys would not have the expertise to be able to invest financial assets on the donor’s behalf but the issue, flagged by STEP, was that lots of people creating LPAs were not aware of this requirement. Without the express wording, attorneys would not be able to appoint an investment manager, leaving many LPAs not fit for purpose where the attorney wanted or needed to delegate to a discretionary investment manager. If there was a situation where an attorney was using a discretionary investment manager without the express clause in the LPA, there was a requirement to apply to the Court of Protection for retrospective consent, which was a costly and lengthy process.

The OPG has recently agreed to remove this requirement, with the formal update to the guidance to take place in due course. The OPG has confirmed that an attorney is legally allowed to delegate to a discretionary investment manager without the need to make a retrospective application for authority to the court. STEP understands that this confirmation will be sufficient for attorneys wishing to use a discretionary investment manager until the guidance is updated accordingly.

Next Steps

These findings and developments coincide with the results of last year’s consultation on modernising and simplifying the LPA process, partly by moving to a predominantly digital service. LPAs were introduced in 2007 as a more flexible and protective alternative to its predecessor, the Enduring Power of Attorney, but in an increasingly digital world (exacerbated in part due to the pandemic and surges in remote working), further modernisation is required to:

  • Increase safeguards (particularly for the donor);
  • Improve the process of making and registering LPAs; and
  • Achieving sustainability for the OPG and keeping LPAs affordable for all.

As well as considering what steps to take following this consultation, the OPG, together with the Ministry of Justice, should also urgently look into educating the public as well as financial and other institutions on LPAs to enable better understanding, more effective use, and most importantly to increase protection and support for those who have lost mental capacity in managing their affairs.

You can find our detailed factsheet about Lasting Powers of Attorney here.