Abuse of Power of Attorney

In recent years there has been a dramatic increase in people making Lasting Powers of Attorney (LPAs) to give decision making powers to trusted individuals (“attorneys”) in the event of loss of mental capacity. The government is now considering updating the paper-based process introduced in 2007, to a more modern, digital method whilst ensuring that appropriate safeguards are in place. A consultation process has taken place to examine the LPA making process. 

Acting in the donor’s best interest

The Mental Capacity Act 2005 requires that attorneys must act in the donor’s best interests if they are making decisions. However, there is increasing concern as to how this is being regulated. 
When a donor creates a Finance and Property LPA, they potentially give their attorney access to all bank accounts, investments, pensions and other benefits. 

There are currently only a few safeguarding measures in place to limit the risk of an attorney taking advantage of their position. 

Safeguarding measures

1.Use of a certificate provider

A certificate provider is someone who is present when the donor signs the LPAs. They sign to confirm that the donor has capacity and knows what they are doing. A certificate provider must have known the donor for more than two years and they are not related to them, or any of the attorneys.  

A legal professional can also act as a certificate provider which we highly recommend. Without using a legal professional, there is the possibility that an LPA is made without any real confirmation of capacity or proof that the donor was fully informed about the power they are granting to their attorney. 

2.    Notification on registration

The LPA includes a section which allows the donor to notify certain people that their LPA is being registered. The people who are notified are able to object to the application but only for certain reasons. After that, they are no longer involved in the LPA but can raise concerns about the attorney’s actions at any time.

Notification is optional.  We recommend naming someone else to be notified so that this puts a trusted third party on notice about the existence of the LPA.

3.    Informing the Office of the Public Guardian (OPG)

Anyone can protect a donor by informing the OPG if they believe an attorney is taking advantage of their position. 

In the case of R v TJC [2015] EWCA Crim 1276 the donor appointed his daughter as his attorney.  He then developed dementia and had to go into a full-time care home. The attorney allowed her daughter and friends to live in the donor’s property rent-free whilst the bills continued to come out of the donor’s account, as well as his care home fees. 

Over a year later, the donor’s son saw the donor’s bank statement and contacted the OPG as he was concerned about the attorney’s actions. The OPG opened an investigation which found that significant sums of money had been transferred from the donor’s account into the attorney’s personal bank account and that an investment held by the donor had had the funds withdrawn. In total roughly £75,000 was taken from the donor’s assets by the attorney. 

The attorney appealed and attempted to justify each of her withdrawals. However, the Court of Appeal found that the total sum withdrawn by the attorney exceeded reasonable sums that would have been incurred providing for the donor’s needs. Therefore, it was decided that she could not possibly have been acting honestly. The attorney was charged for her abuse of position under Section 4 of the Fraud Act 2006. Unfortunately, in this case as it is in many others, it was only possible to inform the OPG after the attorney had taken advantage of their position.

Changes being discussed

The OPG are looking at making LPAs easier to complete which is a potential concern as many people will complete the forms without taking legal advice. However, the OPG are also considering expanding their legal authority to carry out further checks such as identification verification of attorneys. 

They are proposing to make it easier to object to an LPA being made which will help to avoid registration of LPAs that have named inappropriate attorneys or applications made by donors who do not understand what they have signed.

The Ministry of Justice is now analysing the consultation and the government’s response will be published in spring 2022 outlining changes that will be made.
 

What can you do to avoid your LPAs being misused?

We do generally recommend making an LPA but the arrangement’s success relies on appointing trustworthy and honest attorneys who have your best interests at heart.  We strongly recommend taking independent advice in order to understand the risks and benefits of the appointment. It is important to make an LPA ahead of the time, before the onset of any capacity issues. This will allow you to think rationally about your options and be less susceptible to persuasion. Furthermore, a legal professional will explain in detail what the LPAs can be used for, as well as any instructions and preferences you can include in the form to build in added protection.

If you are an attorney

We are also able to give advice to attorneys on their duties and powers.  Attorneys should spend time familiarising themselves with the Mental Capacity Act Code of Practice.

Please contact a member of the Private Client department if you would like further advice on making or reviewing Lasting Powers of Attorney or if you are currently acting as an attorney. 

“This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.”