1.1 Lasting powers of attorney ("LPAs") have been around for over five years now. LPAs are a wonderful tool for enabling people to delegate powers to an attorney to act in their best interests in the future should they lack capacity to make decisions themselves. Of course, attorneys have certain duties and must act within the scope of the powers set out in the LPA. The authority conferred by the LPA is subject to the provisions of the Mental Capacity Act 2005 and attorneys must have regard to the Code of Practice.
1.2 As a result, the usual scenario is that LPAs are used effectively and appropriately by attorneys. However, a few recent cases have been heard in the Court of Protection where attorneys have not complied with their duties and have abused their position.
1.3 In this note, we:
- consider the safeguards that are built into LPAs;
- consider some of the recent cases involving abuse by attorneys;
- look at some of the practical points that arise from these cases to consider the risk factors for abuse, what can be done to prevent it and what to do where there are concerns of abuse.
1.4 (This note focuses on property and financial affairs LPAs rather than health and welfare LPAs).
2.1 From 1 October 2007, it was possible to create an LPA and no longer possible to create a new EPA. There had been concerns about EPAs that they were short and simple documents; to a degree they were too easy to complete without sufficient focus being given by the donor as to who they were appointing as an attorney or to the capacity of a donor to enter into the power. There were also concerns that EPAs were at times being created on behalf of people already lacking capacity and that there were insufficient safeguards in place to prevent this.
2.2 One of the safeguards introduced with LPAs is that a donor can name up to 5 people to be informed when an application is made to register the LPA. Those named people can then object to the registration on specified grounds which include (amongst others) that fraud or undue pressure was used to induce the donor to make the power or that the attorney proposes to behave in a way that would contravene his authority or would not be in the donor's best interests. If the donor chooses not to identify any people to be notified, then s/he must involve not one but two certificate providers in creating the LPA. The fact that the donor has free choice of the identity and number of people to be notified is intended to be an improvement on the position in relation to EPAs, where notification had to be made in accordance with a fixed kinship list. However, a donor who has been the victim of fraud or undue pressure might 'choose' persons to be notified who would not protect him by objecting to registration.
2.3 A further safeguard is the need for a certificate provider to be involved in the execution of an LPA (not previously required with EPAs). A certificate provider must certify that the donor understands the purpose of the LPA and the scope of the authority; that no fraud or undue pressure is being used to induce the donor to create the LPA; and there is nothing else that would prevent the LPA being created. Guidance notes produced by the Office of the Public Guardian ("OPG") set out possible questions that a certificate provider can ask a donor in trying to reach their conclusions before signing the LPA.
2.4 The certificate provider must have known the donor personally for at least two years as more than an acquaintance (a knowledge-based certificate) or be someone who on account of his professional skills considers that he is competent to make the judgements necessary to provide the certificate (a skills-based certificate). In order to prevent influence, certain people cannot act as a certificate provider including the following:-
- A family member of the donor
- An attorney or replacement attorney named in the LPA
- An attorney or replacement attorney named in any other LPA or EPA which has been executed by the donor (even if revoked and never used)
- A family member of any of the donor's attorneys or replacement attorneys
- A director or employee of a trust corporation acting as an attorney or replacement attorney in the LPA
- A business partner or paid employee of the donor or of any of the donor's attorneys or replacement attorneys
- An owner, director, manager or employee of a care home in which the donor is living when the LPA is executed or a member of their family
2.5 In cases where there is a dispute over the validity of an LPA, it is likely that the Court will consider the evidence of the certificate provider (contemporary with the decision) and weigh it against evidence of a medical expert (prepared after the event). In several recent cases, the Court has preferred the evidence of certificate providers even though they were not expert medical witnesses, because their evidence was decision and time specific. Certificate providers should therefore be encouraged to keep clear notes of their discussions with the donor at the time they sign the LPA with an explanation of how they reached the decision that enabled them to provide the certificate. These notes should be kept for as long as is necessary and at least until the LPA is registered in case there is a challenge over the validity of the LPA.
2.6 Further provision introduced into LPA forms are sections where the donor can give guidance to the attorneys and confirm that they have agreed that the attorney can charge for his services and the basis on which that is to take place, in order to avoid confusion later on. This was intended to reduce disputes over attorney fees but inevitably, such disputes do still occur.
2.7 The Law Society's practice note on LPAs (8 December 2011) states:
"You should, when advising clients of the benefits of LPAs, also inform them of the risks of abuse, particularly the risk that the attorney could misuse the power. You should discuss with the donor appropriate measures to safeguard against the LPA being misused or exploited. You may also notify other family members or friends (who are not named persons to be notified of an application to register the LPA) of the existence of the power, why they have chosen the attorney and how the donor intends it to be used. This may help to guard against the possibility of abuse by an attorney and may also reduce the risk of conflict between family members at a later stage."
3. Have the safeguards worked?
3.1 The safeguards have been a useful step forward. However the LPA scheme is essentially based on trust and envisages a minimal intervention by public authorities. The Court would not usually exercise its supervisory powers (for example under section 23 of the Mental Capacity Act to request reports/accounts/records) unless it has reason to do so, possibly because of concerns raised by the OPG.
3.2 Further on, we consider how the OPG itself becomes aware of possible abuse and what it can do if concerns are raised. First, we will look at some of the recent cases where attorneys have been found to have contravened their authority and acted in a way that was not in the donor's best interests.
4. Re Harcourt; The Public Guardian v A (31 July 2012)
4.1 This was an application heard by Senior Judge Lush in relation to the management of Mrs Harcourt's property and financial affairs by her daughter under an LPA.
4.2 Mrs Harcourt signed an LPA for property and financial affairs appointing her daughter to be her sole attorney. There was no replacement attorney appointed nor were any restrictions or conditions specified. Her other daughter was the only person to be notified when an application was made to register the LPA. A solicitor witnessed the signature and acted as the certificate provider. The LPA was registered two months later.
4.3 Subsequently, the manager of the rest home where Mrs Harcourt lived became concerned because:-
- Mrs Harcourt's care home fees had not been paid
- The attorney gave her mother very little pocket money
- Mrs Harcourt had received a letter from a bank confirming a loan
- She had also received correspondence about credit card applications
- The attorney visited her mother very sporadically (every two months)
4.4 2 years after the LPA was registered, the manager of the rest home contacted the Vulnerable Adults Team at GHI County Council who (4 months later) raised the matter with the OPG who then investigated. A Court of Protection Visitor went to see Mrs Harcourt and made recommendations. It transpired that sums were unaccounted for and there had been frequent (sometimes daily) cash withdrawals of £300 since the LPA had been registered. The OPG applied to the Court for an order suspending the LPA and freezing Mrs Harcourt's accounts while the matter was further investigated. A directions order was made.
4.5 The attorney opposed the OPG's application. She asked for more time to respond to the allegations and said "I believe I am still the most appropriate person to act as lasting power of attorney (LPA) for my mum's affairs. I am the only relative/close family that she has in the UK and strongly feel that I have a duty to care and look after her in her old age, now that my father is no longer alive to do so. Although I maintain I am best placed to look after my mum I would welcome any advice, guidance and support that the OPG is able to provide me with on an ongoing basis. If the OPG were able to do this then it would serve to enable me to carry out the LPA to a higher standard in the future. I need a hearing date in April 2012 or later. I have used up all my holidays for the year ending 31.03.2012 and so am not able to get time off work until after 01.04.2012". An extension of time for complying with the order was granted. However the attorney said that she found it impossible to complete the outstanding directions from the Court order and repeatedly asked for an adjournment. The hearing eventually took place in the attorney's absence (one year after the care home manager had initially raised her concerns).
4.6 The donor of an LPA who does not lack capacity, can ask his attorney to produce accounts receipts, invoices, bank statements etc. and give an explanation of any concerns that may arise in relation to the financial records. However where the donor lacks capacity to make these decisions, the Court of Protection can do so on their behalf if it is in their best interests to do so. Therefore, the Court had to consider whether Mrs Harcourt had the capacity to seek accounts and financial records from her attorney, to examine those and to call for an explanation of any queries.
4.7 The Court of Protection Visitor stated "In my view Mrs Harcourt lacks the capacity to make decisions about her finances. She could not tell me about any bank account. She has no knowledge or memory of taking out any loan or credit cards. She believes L [C's husband] looks after her pension even though she tells me she does not live at DEF Rest Home so could not explain why he would. Therefore it follows she cannot deal with any concerns raised about the way her affairs are handled, particularly as the attorney rarely visits any more. As she has no recollection of signing an LPA, and I rather suspect she does not know what this is, she would be unable to revoke it."
4.8 It is worth noting at this stage the difference between the Public Guardian's powers and the Court of Protection's powers in relation to LPAs:-
Section 58 (1) of the Mental Capacity Act 2005 sets out the functions of the Public Guardian which include the following:-
- Establishing and maintaining a register of LPAs
- Directing a Court of Protection Visitor to visit an attorney under an LPA
- Directing a Court of Protection Visitor to visit the donor of an LPA
- Receiving reports from attorneys
- Reporting to the Court of Protection
- Dealing with representations (including complaints) about the way in which an attorney is exercising his powers
Under the Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007, the following regulations are relevant in this context:
- Regulation 43 enables the Public Guardian to make applications to the Court of Protection where it considers it necessary to do so (for example for the suspension or revocation of an LPA)
Regulation 46 provides that where it appears to the Public Guardian that an attorney may have behaved in a way that contravened his authority or is not in the best interests of the donor or is proposing to behave in such a way or has failed to comply with the requirements of an order or directions given by the court, the Public Guardian may require the attorney to provide specified information or documents before the end of such reasonable period as may be specified.
However this is the limit of the Public Guardian's powers. The OPG has no powers of enforcement. If it considers it necessary for the donor's accounts to be frozen or for the attorney's powers to be suspended, or for the LPA to be revoked, it must apply to the Court of Protection for an order.
- The powers of the Court of Protection in relation to LPAs are set out at sections 22 and 23 of the Mental Capacity Act 2005. Section 23 provides for the Court (if the donor lacks capacity to do so) to give directions to the attorney to produce reports, accounts, records, information, documents. However as explained above the Court would not normally use this provision unless it has reason to do so because the LPA regime envisages minimal intervention by the Court. The Court's powers simply duplicate those of a capable donor when they are used. Under section 22, if the Court is satisfied that the attorney has behaved or is behaving in a way that contravenes his authority or is not in the donor's best interests or proposes to behave in such a way, the Court may direct that the LPA is not registered or, if the donor lacks capacity to do so, to revoke the LPA.
4.9 The Code of Practice refers (at paragraph 7.67) to the requirement to keep accounts:
"Property and financial affairs attorneys must keep account of transactions carried out on the donor's behalf. Sometimes the Court of Protection will ask to see accounts. If the attorney is not a financial expert and the donor's accounts are relatively straightforward, a record of the donor's income and expenditure (for example, through banks statements) may be enough. The more complicated the donor's affairs, the more detailed the accounts may need to be".
4.10 7.65 of the Code of Practice refers to sections 22 and 23 of the Mental Capacity Act and the wide-ranging powers given to the Court of Protection in relation to the operation or validity of an LPA. The Court of Protection can also give extra authority to attorneys, order them to produce records or order them to produce specific information. The Code of Practice states that attorneys must comply with any decision or order that the Court makes.
4.11 In Re Harcourt, the Court found that she lacked capacity to give directions to her attorney for the production of reports, accounts, records and other information about her property and financial affairs. The Court also found that she lacked capacity to examine any such records or to instruct anyone else to do so. Therefore, the Court had discretion to intervene on the donor's behalf.
4.12 Senior Judge Lush considered the section 4 checklist for best interests:
- He was satisfied that it was unlikely that Mrs Harcourt would ever regain sufficient capacity to be able to manage her financial affairs and revoke the LPA herself if she wanted to do so.
- He took into account Mrs Harcourt's past wish, when she still had mental capacity, for her daughter to be her attorney to manage her property and financial affairs.
- In terms of considering the views of others, the Judge took into account that the attorney believed she was still the most appropriate person to look after her mother's finances.
- Mrs Harcourt's other daughter had not taken part in the proceedings but the Court did take into account the views of the care home manager who wanted to ensure that her fees were paid on time and that the donor had an adequate personal allowance as well as being treated with respect.
- The Judge noted that the attorney was an auditor and therefore it would be reasonable to expect a higher standard of care from her.
- Mrs Harcourt's finances were relatively straightforward.
- The factor of magnetic importance in determining what was in Mrs Harcourt's best interests was that her property and financial affairs should be managed competently, honestly and for her benefit.
4.13 The attorney had been reluctant to cooperate with the OPG's investigation but what it had discovered had questioned the attorney's competence and integrity. The attorney had deliberately obstructed the investigation and failed to comply with an order of the Court. The Court therefore found that the attorney was not behaving in Mrs Harcourt's best interests. It was satisfied that Mrs Harcourt lacked the capacity to revoke the LPA herself and therefore the Court revoked the LPA on her behalf.
4.14 Mrs Harcourt had not appointed a replacement attorney in the LPA. However, it is worth noting that even where the Court finds an attorney as behaving in a way that contravenes his authority or is not in the donors best interest, this is not an event that would trigger the appointment of a replacement attorney had one been appointed. Therefore following the revocation of the LPA, a deputy needed to be appointed to manage Mrs Harcourt's financial affairs.
4.15 One final interesting point raised by Senior Judge Lush relates to Article 8 of the European Convention on Human Rights. Article 8 states that:
- Everyone has the right to respect for his private and family life, his home and his correspondence.
- There shall be no interference by a public authority with the exercise of this right except such as in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic wellbeing of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.
4.16 Therefore on the face of it, the revocation of a LPA where the donor has specifically executed that LPA and chosen their attorney would appear to be a violation of their article 8 rights. Therefore decisions by the Court to revoke a LPA cannot be taken lightly. However in this case, Senior Judge Lush believed that the revocation of the LPA to facilitate the appointment of a deputy was necessary and proportionate for the protection of Mrs Harcourt's right to have her financial affairs managed competently, honestly and for her benefit and for the possible prevention of crime.
5. Re Stapleton; the Public Guardian v (1) Stapleton (2) ABC Borough Council (3 July 2012)
5.1 This case was an application to revoke an EPA but is still interesting in this context.
5.2 Mrs Stapleton had executed an EPA appointing her son as her sole attorney with general authority to act on her behalf in relation to all her property and affairs. The EPA had been registered just over 2 years later. 2 years after that, the Council raised concerns with the OPG about the attorney's conduct as care fees were outstanding and the attorney had sold the donor's house (£188,000) and bought another property (£141,000) in his own name. In addition, he had used his mother's funds (£5,000) to purchase a pick-up vehicle which again, was registered in his sole name. The OPG applied to the Court of Protection for an order to revoke and cancel the registered EPA and to direct that a panel deputy be appointed.
5.3 The attorney opposed the application and his solicitors attempted to provide reasons why he had not maintained a clear differentiation between his mother's money and his own and an explanation of how he had administered his mother's assets. For example, they explained the sale of her house: "it has always been Mrs Stapleton's wish to relocate to [county where new property is situated]. Her going into hospital and respite care was seen as the opportunity to effect this wish."
5.4 They explained the purchase of the pickup vehicle: "this was used to transport Mrs Stapleton's furniture and possessions between the old and new properties, used when doing work on both properties and used to transport elderly relatives to see Mrs Stapleton".
5.5 However Senior Judge Lush said "this is not a case where there has been an inadvertent intermingling of funds. It is a wholesale assumption of dominion over Mrs Stapleton's estate by her attorney, as if she were dead and he had come into his inheritance and, of course, there has been no substantial diminution of her assets because to all intents and purposes they are now the attorney's and he is very careful with his money".
5.6 He went on to say "I am not convinced that Mrs Stapleton's sudden lifelong desire to relocate…is any justification for D using her money to buy a property…in his name". Nor was he persuaded that the property had been registered in the attorney's name because a professional conveyancer had told him he could do so. The Senior Judge did not believe it was in Mrs Stapleton's best interests for her attorney to spend £5,000 on a pickup vehicle with her own money but registered in the attorney's name.
5.7 The Senior Judge also said: "nor am I persuaded that his aversion to charging his daughter rent to stay in the new property because the idea of charging rent would have appalled his mother is a reasonable justification for failing to act in his mother's best interests. What it demonstrates is that, when faced with such a patent conflict of interests, he has blithely subordinated his mother's interests to those of his daughter, who was in full time employment in a managerial position".
5.8 The Judge found that the attorney had used an ongoing dispute with the NHS as a smokescreen to deflect his reluctance to pay his mother's care home fees and ultimately to maximise his own inheritance. His offer to re-register the title to the property in his mother's name and to rectify his other defaults were said to be "too little, too late". The Court found that the attorney in all the circumstances was unsuitable to be the donor's attorney and a panel deputy should be appointed.
5.9 On costs: The attorney sought an order that his costs be met from Mrs Stapleton's assets. Rule 156 of part 19 of the Court of Protection Rules 2007 sets out the general rule:
156: Where the proceedings concern P's property and affairs the general rule is that the costs of the proceedings, or of that part of the proceedings that concern P's property and affairs, shall be paid by P or charged to his estate.
Rule 159 then sets out the circumstances in which there can be a departure from the general rule:
The Court may depart from rules 156 to 158 if the circumstances so justify, and in deciding whether departure is justified the court will have regard to all the circumstances, including:
- The conduct of the parties;
- Whether a party has succeeded on part of his case, even if he has not been wholly successful; and
- The role of any public body involved in the proceedings.
The conduct of the parties includes:
- Conduct before, as well as during, the proceedings;
- Whether it was reasonable for a party to raise, pursue or contest a particular issue;
- The manner in which a party has made or responded to an application or a particular issue; and
- Whether a party who has succeeded in his application or responded to an application, in whole or in part, exaggerated any matter contained in his application or response.
- Without prejudice to rules 156 to 158 and the foregoing provisions of this rule, the court may commit a party to recover their fixed costs in accordance with the relevant practice direction.
5.10 Senior Judge Lush found that a departure from the general rule was justified in this case as it would be unreasonable to expect Mrs Stapleton to pay the costs of the proceedings because of the attorney's conduct both before, as well as during, the proceedings. The attorney was therefore ordered to pay his own costs.
6. Re Buckley; The Public Guardian v C (22 January 2013)
6.1 This is a recent application by the Public Guardian for the revocation of an LPA and the cancellation of the registration of that LPA.
6.2 Miss Buckley had appointed her niece as an attorney under an LPA for property and affairs. No replacement attorney was appointed and a close friend was named as the only person to be notified when an application was made to register the LPA. A solicitor witnessed Miss Buckley's signature on the LPA and was the part B certificate provider. An application to register the LPA was made a month later.
6.3 A little over a year after the registration, a complaint was made to the OPG about the way in which the attorney was handling the donor's finances. The OPG therefore opened an investigation and sent a Court of Protection Visitor. The Visitor concluded that Miss Buckley lacked the capacity to ask her attorney to account and also lacked capacity to revoke the LPA. She commented: "we talked about her niece C. She had a vague recollection of a niece and said she visited her home when she was ill and took everything she wanted and then did not bother with her anymore. She said she only visited when she wanted money and indicated this by rubbing her fingers together. The manager was present during this conversation and believed the client's memory of some matters was quite reliable and that the client appeared to recollect her niece wanting money previously and no longer being bothered with her now. When asked whether she wanted the niece to manage her money she indicated very negatively. When asked if she had wanted her niece to use her money for anything special she said she did not trust her and had only ever wanted her money".
6.4 The OPG applied to the court for an interim order to suspend the LPA and for her accounts to be frozen (access limited to payment of care home fees); the attorney was directed to provide a full account of her dealings under the LPA.
6.5 The OPG's investigation showed the following:-
- Miss Buckley's house had been sold for £279,000 some three months after the LPA had been registered
- The attorney had withdrawn £72,000 from the donor's funds to set up a reptile breeding business
- The attorney has used £7,650 of the donor's capital for her own personal benefit
- Although the attorney said she visited Miss Buckley once a week, the nursing home said she had not visited at all until October 2012 when she appeared to have obtained Miss Buckley's signature on some unknown documentation
- At one stage there had been daily cash withdrawals of £300 from her account
- Social services had been alerted who had referred the matter to the police
- Miss Buckley's estate may have incurred a total loss of approximately £150,000
6.6 A Court of Protection Special Visitor reported that Miss Buckley "was unable to understand the nature and effect of an LPA to a sufficient degree or to choose an attorney, was not aware of her financial dealings and could not recall detail sufficiently well or concentrate long enough to weigh information in the balance to come to decisions about an attorney or to direct or instruct an attorney".
6.7 Further investigations by the OPG showed "…Miss Buckley has contributed at least £87,682.53 towards the reptile investment venture described by C. In the absence of any contrary evidence, the Public Guardian maintains that Miss Buckley's finances may have been used to heavily subsidise what appears to be a reptile breeding business, without any formal guarantee or security or her share of the alleged investment returned".
6.8 The Public Guardian therefore requested that the Court revoke and cancel the registered LPA. It also said that should the Court decide to appoint a deputy in the interests of Miss Buckley, the deputy may need to take action against the former attorney in order to restore Miss Buckley's estate to a more realistic level.
6.9 The attorney did not object to the LPA being revoked but did say that she had not acted contrary to her aunt's best interests and that in her view the investments made were in her aunt's best interests. She felt that the reptile breeding business would be a good investment for her aunt as she had been told that it would return her money plus 20% interest within two years. She commented that her aunt loved animals and felt that this would be an investment with which she would be happy.
6.10 Senior Judge Lush referred in detail in his judgment to the responsibilities of an attorney acting under an LPA when investing the donors' funds. He commented: "There are two common misconceptions when it comes to investments. The first is that attorneys acting under an LPA can do whatever they like with the donors' funds. And the second is that attorneys can do whatever the donors could - or would - have done personally, if they had the capacity to manage their property and financial affairs".
6.11 Senior Judge Lush said "managing your own money is one thing. Managing someone else's money is an entirely different matter. People who have the capacity to manage their own financial affairs are generally not accountable to anyone and do not need to keep accounts or records of their income and expenditure. They can do whatever they like with their money, and this includes doing nothing at all. They can stash their cash under the mattress, if they wish and, of course, they are entitled to make unwise decisions. None of these options are open to any attorney acting for an incapacitated donor, partly because of their fiduciary obligations and partly because an attorney is required to act in the donor's best interests".
6.12 As a fiduciary, an attorney must exercise such care and skill as is reasonable in the circumstances when investing the donor's assets and this duty of care is even greater where attorneys hold themselves out as having specialist knowledge/experience.
6.13 Although the Trustee Act 2000 does not expressly apply to attorneys, it is worth considering in this context. Section 4 requires trustees to have regard to the standard investment criteria (the suitability of the investments and the need to diversify insofar as is appropriate in the circumstances). In addition, trustees are required to review the investments from time to time and consider whether they should be varied. Further, section 5 of the Trustee Act requires trustees to obtain and consider proper advice about the way in which their investment powers should be exercised (unless the trustees consider it unnecessary or inappropriate to do so).
6.14 In the judgment, Senior Judge Lush refers to the in-house guidance Investing for Patients produced by the Investments Branch when the Court of Protection and the antecedents of the OPG were involved in the investment of patients' funds (before the Mental Capacity Act 2005 came into force). The last edition was in 1998 and so the guidance is now out of date but Senior Judge Lush used the opportunity in the judgment in the case of re Buckley to suggest how it could be rewritten (particularly with a focus on recommendations for short term investments as that was the question relevant in re Buckley given that the donor was in her early 80s).
6.15 Two of the most important factors when considering the suitability of investments are the donor's age and life expectancy. Attorneys acting under an LPA should ensure that any investments or services provided for the donor are provided by individuals or firms who are regulated by the Financial Services Authority.
6.16 Senior Judge Lush said: "Until such time as the Office of the Public Guardian issues its own guidance to attorneys and deputies on the investment of funds, I would suggest that, as they have fiduciary obligations that are similar to those of trustees, attorneys should comply with the provisions of the Trustee Act as regards the standard investment criteria and the requirement to obtain and consider proper advice. I would also recommend that attorneys and their financial advisors have regard to the criteria that were historically approved by the court and the antecedents of the OPG in Investing for Patients, albeit with some allowance for updating, as suggested at paragraph 37 above".
6.17 He went on to make three further points as follows:-
- Attorneys should keep the donors' money and property separate from their own or anyone else's (paragraph 7.68 of the Mental Capacity Act Code of Practice). Where possible all investments should be made in the donors' name but if for any reason that is not possible, the attorney should execute a declaration of trust or some other formal record acknowledging the donor's beneficial interest in the asset.
- Subject to a sensible de minimis exception, where the potential infringement is so minor that it would be disproportionate to make a formal application to the court, an application must be made to the court for an order under section 23 of the Mental Capacity Act 2005 in any of the following cases: a) gifts that exceed the limited scope of the authority conferred on attorneys by section 12; b) loans to the attorney or to members of the attorney's family; c) any investment in the attorney's own business; d) sales or purchases at an undervalue; e) any other transactions in which there is a conflict between the interests of the donor and the interests of the attorney.
- Attorneys should be aware of the law regarding their role and responsibilities. Ignorance is no excuse. Attorneys should at least be familiar with the section on the LPA form headed "information you must read" and the provisions of the Code of Practice (section 42(4)(a) of the Mental Capacity Act requires an attorney acting under an LPA to have regard to the Code).
6.18 Senior Judge Lush was satisfied that the attorney in Re Buckley had contravened her authority and acted in a way that was not in the donor's best interests. It was a highly unsuitable investment to make and the attorney broke almost every rule in the book in making it. She did not obtain and consider proper advice from someone who was qualified to give investment advice. The investment was very high risk. When investing funds on behalf of older people, the perceived wisdom is that the investments should be safe and very little risk is acceptable. The attorney had invested in her own business which was a breach of her fiduciary duty.
6.19 7.60 of the Mental Capacity Act Code of Practice says "a fiduciary duty means attorneys must not take advantage of their position. Nor should they put themselves in a position where their personal interests conflict with their duties. They also must not allow any other influences to affect the way in which they act as an attorney. Decisions should always benefit the donor, and not the attorney. Attorneys must not profit or get any personal benefit from their position, apart from receiving gifts where the Act allows it, whether or not it is at the donor's expense".
6.20 The following factors (set out in Investing for Patients) may need to be considered by an attorney when making investments on behalf of the donor:-
- Whether any major items of expenditure are anticipated or should be planned for
- Whether any gifts or payments to dependants are likely to be made
- The type of return required
- The level of acceptable risk
- Whether there is an existing portfolio (if so, the tax and cost considerations that may affect decisions about whether to change it and how quickly)
- If the capital available for investment is over £100,000 and when invested, it will adequately satisfy the donor's current and future income and capital requirements, the interests of the beneficiaries under the donor's Will or intestacy should also be considered
6.21 The investment was made in the attorney's name in breach of the requirement (at paragraph 7.68 of the Code of Practice) that an attorney keep the donor's money separate from her own. In addition, the attorney's use of nearly £44,000 of the donor's capital was greatly in excess of the limited authority to make gifts (section 12 of the Mental Capacity Act).
6.22 Senior Judge Lush found that Miss Buckley was incapable of revoking the LPA herself, that the attorney had contravened her authority and acted in a way that was not in Miss Buckley's best interests and that the revocation of the LPA in order to facilitate the appointment of a deputy was both a necessary and proportionate response for the protection of Miss Buckley's right to have her financial affairs managed competently, honestly and for her benefit, and for the prevention of crime. It was therefore in Miss Buckley's best interests that the Court revoke the LPA.
7. How often are concerns raised with the OPG?
7.1 Are these cases unusual? The Compliance Unit at the OPG deals with complex cases and in particular, investigations into concerns about deputies and attorneys. According to the OPG's Annual Report for 2011/12, they received 3,653 referrals in 2011/12 compared to 2,566 in 2010/11 which is a 42% increase. The majority of investigations undertaken were into an individual acting under a single deputyship order or power of attorney. The unit also carried out 32 investigations into professional and public authority deputies and attorneys, involving over 1,000 cases.
7.2 (To put these numbers into context, the Business Plan for 2013/14 recently published by the OPG reports that 21,000 LPAs and EPAs were registered each month in 2012/13.)
7.3 The Annual Report for 2011/12 says that the vast majority of investigations undertaken that year were into allegations of financial abuse. Of the referrals received by the Compliance Unit, 38% were received from concerned relatives or friends, 24% from local authorities, 9% from solicitors and 9% from attorneys or deputies (usually to report concerns about a co-attorney or co-deputy or third party). The remaining 20% of referrals came from banks, doctors, advocates, carers and the police.
7.4 Outcomes from the OPG's investigations included:
- 94 applications to the Court of Protection to discharge deputies or to revoke EPAs/LPAs.
- 5 other types of Court application, eg to freeze bank accounts or to obtain an Order directing the deputy/ attorney to account to the Public Guardian.
- 74 cases where the investigation found no evidence of the deputy/ attorney acting inappropriately.
- 2 cases where the Public Guardian has written a formal instruction to deputies/ attorneys to comply with the requirements of their role or face further action.
7.5 The Annual Report for 2011/12 states that "this year has seen a shift in approach towards seeking agreed outcomes where these work in the best interests of the person lacking capacity. For example, in some cases the Public Guardian has sought directions from the Court which introduce additional scrutiny of the attorney or deputy without removing them from their role, and in other cases, sought agreement between co-attorneys about how they will work together in the future, or an undertaking about the level of expenses and any future gifting."
"In….4 Attorneyship cases in 2011/12, it has been possible to negotiate a Consent Order between the Parties, which has then been submitted to the Court to be considered and approved by the judge. This has often resulted in better outcomes for clients in terms of reducing legal costs and being able to retain family members in charge of their affairs, No party has the stress of having to travel to attend a hearing and of course, the time of the Court is not wasted."
"However, at the other end of the spectrum, where assets have been at risk of misappropriation, the Public Guardian has not shied away from making emergency 'without notice' applications under the Court of Protection Rule 81. 12 such applications were made in the course of the year. In a number of cases the deputy/attorney was suspended, and/or bank accounts frozen, pending the completion of OPG or in some cases, police investigation."
7.6 The OPG's Business Plan for 2013/14 refers to their objectives for the coming year, one of which is "to take prompt and effective action where concerns are raised about an attorney's or deputy's actions." They aim to achieve this through the following activities:
- Conduct or commission a review of wider research around the safeguarding of vulnerable adults in order to support the review of supervision and the effective focus of their safeguarding resources (by June 2013).
- Enhance the current notification process about a deputy or attorney's actions, so that the concern-raiser receives prompt notification of the OPG's intended action (by March 2014).
- Reduce the average time taken to conclude investigations into the actions of a deputy or attorney and carry out the recommendations made to the Public Guardian (by March 2014).
- Review and re-launch their safeguarding vulnerable adult's policy (by June 2013).
8. Choosing an attorney
8.1 It is clearly important for clients who wish to execute an LPA, to consider very carefully who they want to appoint as an attorney. The OPG says in its guidance for people who want to make a lasting power of attorney for property and financial affairs that: "Being your attorney is an important role. You need to be sure that the person you choose knows you well enough to make decisions on your behalf that are in your best interests. You must be able to trust them. You also need to make sure that the person is happy to take on the role… Your attorney could be anyone aged 18 or over, for example a family member, friend, a professional, your spouse, partner or civil partner."
8.2 The practicalities should be thought through. As well as choosing someone who the donor trusts, consideration should be given as to whether the chosen attorney has the skills and knowledge to undertake the role, whether they have sufficient time to take on the role, whether they are in good health and ideally it should be someone who lives nearby.
8.3 Consideration should be given as to the suitability of appointing a family member or someone independent or a combination of both. The appointment of a sole attorney may provide greater opportunity for abuse than appointing more than one attorney. It is important for the donor to discuss the appointment with the chosen attorney to ensure they are willing to take on the role and understand what it will involve. A donor cannot insist on somebody agreeing to become their attorney (however, once the attorney accepts the role and signs the LPA, this is confirmation that they are willing to act once the LPA is registered, subject to their ability to withdraw from acting).
8.4 When the attorney signs the LPA, he must confirm that he has read the prescribed information and that he understands the duties imposed on him under section 1 of the Mental Capacity Act and under section 4 (section 1 sets out the principles and section 4 relates to best interests). An attorney must also follow the Code of Practice. The attorney should be aware of his duties and also be aware of the limits of his authority (e.g. the limited extent of gift making allowed under section 12 of the Mental Capacity Act).
8.5 It is more common for an attorney not to comply with his duties because of a lack of an understanding of what those duties are or as a result of a lack of skills about acting as an attorney rather than an attorney who specifically intends to abuse their position. It is therefore important for practitioners to ensure that attorneys are fully aware of their duties and of what the role involves. It is important for attorneys to realise that they act as a fiduciary and must act in the donor's best interests. That is not the same as taking decisions (such as investing in a reptile breeding business) that the attorney thinks the donor would have taken had he had mental capacity.
9.1 So what duties does an attorney have? He must act within the scope of the powers set out in the LPA. The authority is subject to the Mental Capacity Act 2005, in particular, section 1 (the principles) and section 4 (best interests). An attorney must also have regard to the Code of Practice. Attorneys have a duty:
- of care
- to carry out the donor's instructions
- not to take advantage of their position
- not to delegate unless authorised to do so
- of good faith
- of confidentiality
- to comply with directions of the Court of Protection
- not to disclaim without notifying the donor, other attorneys and the Public Guardian
- comply with the relevant guidance
- keep accounts
- keep the donor's money and property separate from their own
- apply certain standards of care and skill
9.2 And what authority does an attorney have to make gifts? An attorney is limited in his ability to make gifts of the donor's money by the provisions of section 12 of the MCA 2005. A gift to charity can be made at any time of year, if the donor previously made gifts to that charity or might be expected to make gifts if he had capacity. Gifts to individuals can only be made on customary occasions (births or birthdays, weddings or wedding anniversaries, civil partnership ceremonies or anniversaries, or any other occasion when friends, families or associates usually give presents) and they can only be made to people who are related to or connected to the donor. The value of the gift must be reasonable and take into account the size of the donor's estate.
9.3 The donor cannot confer a wider gift making authority on the attorney than that set out in section 12. A donor can exclude or restrict the gift making authority set out in section 12. Guidance can be included in the LPA on the circumstances in which gifts can be made but this should not exceed the limits set out in section 12. An example of such guidance which failed to achieve its objective can be found in Re Barac SJ Lush 20 February 2013. In that case the donor made an LPA for property and financial affairs which included the following provision: "After having taken full regard for my financial welfare and security I want my attorneys to take sensible steps to protect my estate from the effects of taxation [e.g. Inheritance Tax] and be able to create Trusts where beneficial." On the application of the Public Guardian the provision was severed on the ground that it contravened section 12 of the MCA 2005. Another example is Re Rider SJ Lush 20 February 2013. The donor made an LPA for property and financial affairs which included the following provision: "No political donations to be made other than to the conservative party." On the application of the Public Guardian the provision was severed on the ground that it contravened section 12 of the MCA 2005. While section 12(2)(b) (The donee may make gifts . . . .(b) to any charity to whom the donor made or might have been expected to make gifts) permits the making of gifts to charities (subject to certain conditions), donations to the Conservative party, or any other political party, would not fall within that provision. Finally, in Re Buckley SJ Lush 22 February 2013, the donor made an LPA for property and financial affairs and included the following provision: "Assets should be used firstly to ensure the well being and comfort of [my wife] and secondly to meet any urgent need of the families of the Attorneys and thereafter managed until distributed in accordance with the terms of my will." On the application of the Public Guardian the provision was severed. Although the attorneys would have power to maintain the donor's wife, this should not be the priority of the LPA because section 1(5) of the MCA provides that "An act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests." The attorneys had no authority to meet the needs of their families, as the donor was not under any legal obligation to maintain them. Any maintenance of the families would be a gift which would potentially fall outside section 12 of the MCA 2005.
9.4 If an attorney wishes to make a gift that is outside section 12, such as for tax planning purposes, he must apply to the Court of Protection for permission. The Court will look at the donor's particular circumstances in deciding whether to grant permission. In the recent decision of Re GM the Court considered gifts made by deputies and indicated that the following tax planning gifts would be regarded as de minimis within the meaning of the decision in re Buckley:-
- The annual IHT exemption of £3,000 and the annual small gifts exemption of £250 for up to 10 people, in the following circumstances
- Where P has a life expectancy of less than 5 years
- Where P's estate exceeds the nil rate band for IHT
- The gifts are affordable having regard to P's care costs and will not adversely affect P's standard of care or quality of life
There is no evidence that P would be opposed to gifts of this magnitude being made on his/her behalf
It would be reasonable to regard this guidance as applying equally to attorneys as to deputies
9.5 If an attorney makes unauthorised/ excessive gifts, the Public Guardian may request that the attorney seeks the return of those gifts; or instruct the attorney to apply for retrospective approval (which should not be regarded as a foregone conclusion); or apply to the Court for the removal of the attorney.
10. Additional safeguards
10.1 Many practitioners now advise clients not to include any restrictions or conditions in an LPA in case they are subsequently rejected by the OPG on an application to register the LPA. However, it can be useful to include restrictions or conditions in order to minimise the risk of abuse by an attorney. For example, it may be helpful and appropriate to include a supervisory condition whereby the attorney must provide financial records or accounts to someone who is independent or a requirement that the attorney seeks independent financial advice. However, any restriction which effectively requires arbitration of attorneyship issues by a third party e.g. a provision which requires an accountant or solicitor to adjudicate over the donor's business affairs, or a provision which requires all of the donor's children to agree to decisions, when not all have been appointed attorneys, will be severed as a restriction fettering the attorney's authority.
10.2 Can use of the 'guidance' section avoid the risk of severance of a questionable restriction? No - if the guidance is in mandatory terms, it will still be considered as if it were a restriction, as illustrated by Re Bishop SJ Lush 28 February 2013. The donor appointed attorneys to act jointly and severally and included the following provision: "I direct that my attorneys shall endeavour to act jointly on decisions wherever possible. They must only act severally when all practicable steps to act jointly have been made without success. If an attorney must act severally then that attorney must consult the other before making the decision and keep the other informed of any decision made." On the application of the Public Guardian the provision was severed as being incompatible with a joint and several appointment.
10.3 The Ministry of Justice website publishes decisions of the Court of Protection on severance of restrictions which are invalid or incompatible with the provisions of an LPA.http://www.justice.gov.uk/protecting-the-vulnerable/mental-capacity-act/orders-made-by-the-court-of-protection/lasting-powers-of-attorney
11. How does the OPG become aware of possible abuse?
11.1 The OPG may be alerted to concerns about abuse by an attorney from a number of sources including by a relative or friend or neighbour of the donor, a member of staff if they are living in a care home, a Court of Protection visitor etc. The matter would be referred to the Supervision Division of the OPG who would carry out an initial assessment of the situation and consider the risk to the person concerned. The matter is then referred to the Compliance and Regulation team. The OPG's response will vary depending on the situation. It may investigate the matter further, consider whether to refer the matter to the adult care social services or to the police or it may make an application to the Court of Protection. An application to the Court can be for the revocation of an LPA or for interim relief pending an investigation.
11.2 Initial concerns can be raised with the Compliance Unit at the OPG on their dedicated phone line 0115 934 2777. Indicators of financial abuse can include the following:-
- Unpaid bills, overdue rent, unpaid care home fees, when there is someone who is supposed to be paying those.
- Shortage of money
- Unexplained withdrawals from an account
- Unexplained transfer/ sale of the donor's possessions/ assets
- A sudden change in the donor's living arrangements and/or conditions
- Cut off from family, friend, carers, healthcare staff
- Applications for un-needed credit cards
11.3 These factors do not automatically mean that actual abuse has occurred but may raise concerns. Certain people are more at risk including those over the age of 75, females, living alone and estranged from children. These indicators of abuse are set out in detail in appendix 1 to the OPG's "Safeguarding vulnerable adults policy".
11.4 When concerns are raised with the OPG about the possible abuse of a vulnerable adult, reference should be made by the staff to their guidance "OPG safeguarding vulnerable adults procedures and guidance". There is a useful flow chart at appendix 1 of that guidance which details the process for action in response to suspected or alleged abuse.
12. Professional conduct issues for legal advisors
12.1 So what should we be aware of as practitioners? The helpful guide prepared by Solicitors for the Elderly headed "A safeguarding strategy for recognising, preventing and dealing with the abuse of older and vulnerable people" includes the following advice:-
- Advisors should handle a matter with care and sensitivity as a client may not be prepared to take your advice due to the nature of the abuse.
- Clients do not like or indeed may be unwilling to admit abuse by others, for example, in relation to financial abuse.
- A client may need additional help and support, both emotionally and practically.
- Abuse is often "hidden" so do not always take the situation at face value.
- Consider where there are risks for abuse.
- Abuse may start by being unintentional and the abuser may rationalise the abuse, for example using the client's money for their benefit, as an advancement of their inheritance entitlement.
- People may not like airing their dirty linen in public and may rectify abuse by internal management.
- The client may be subject to different forms of abuse and the solution may involve a number of public bodies and/or legal proceedings.
12.2 Solicitors for the Elderly offer the following advice to advisers (such advice to be tailor made to each client's circumstances and needs):-
- In some cases the outcome for a client may be better were the Court to appoint a deputy rather than the client making an LPA because of the supervision given by the OPG where a deputy is appointed and the Court's requirement for a security bond to protect against mismanagement by a deputy (such security bonds are not required for attorneys). This can be relevant where a client has a history of being exploited or where their relevant relationships are dysfunctional.
- It is necessary to be careful when receiving instructions for LPAs especially if those come from a third party or where the donor is previously unknown to the practitioner. Third party instructions must always be confirmed by the donor and it is important to see the client alone for at least part of the meeting to consider capacity and to ensure the client is free from influence of others.
- It can help to build in protection when drafting an LPA so that there is accountability and external supervision of an attorney. For example, inserting a condition in the LPA that an attorney must produce accounts to a third party.
- The suitability of the attorney should be discussed with the donor carefully. The appointment of a sole attorney provides more scope for abuse than a joint or several appointment; a joint and several appointment provides a greater opportunity for exploitation than a joint appointment due to there being less accountability.
- The donor and the attorney should be made aware of the limits of the power.
- As an advisor, it is necessary to confirm with the donor the circumstances in which an LPA is to be used so that it can be released to the attorney at that point.
13. Changes implemented in April 2013
13.1 A brief mention ought to be made here to a number of changes that are taking place in relation to LPAs. This followed a consultation in 2012.
13.2 Some of the questions in the consultation referred to the requirement for certificate providers. Question 7: Should the requirement for an additional certificate provider, in circumstances where the donor has not specified any named persons, be removed? Based on the answers given, the OPG concluded that a second certificate provider remains an important safeguard to ensure that the donor understands the significance of the LPA and is not under any undue pressure or that any fraud is involved in the making of the LPA application and so the requirement should remain.
13.3 As of 1 April 2013, the minimum length of time for the OPG to register an LPA has been reduced. The "statutory waiting period" is now 4 weeks rather than 6 weeks. People who are entitled to object to the registration of an LPA now have 3 weeks in which to do so rather than 5 weeks.
13.4 An on-line tool for creating LPAs is being introduced in order to make the process simpler, clearer and faster and to reduce errors in LPA forms that reach the OPG requiring correction. Paper forms will continue to exist but it is likely that a significant number of people will create LPAs using the new on line tool (although people who are digitally disadvantaged will find this difficult). However, many practitioners have concerns over whether there are sufficient protections in place to prevent fraudulent use of the digitalised system.
14. And so?
LPA's remain an extremely useful mechanism for enabling people to appoint an attorney to make decisions on their behalf at a time in the future when they may lack capacity. There are instances of financial abuse by attorneys (although relatively rare) and we should all be aware of the steps that practitioners can take to minimise the risk of such abuse as well as being alert to the signs of financial abuse. The OPG are clearly alert to the possible risks and their aim is to reduce the time they take to investigate and to carry out recommendations.
This article by Jessica Negyal was originally delivered at an ACTAPS Seminar on 13 May 2013 hosted by Boodle Hatfield. It then appeared in the ACTAPS Newsletter Issue 163 in June 2013.