Civil Fraud Quarterly Round-Up: Q1 2021
The self-isolation and social distancing bought about as a result of the coronavirus pandemic leaves the elderly and incapacitated even more vulnerable to financial abuse. It is has been well reported that fraudsters are seeking to take advantage of the current situation whether via the internet, on the phone or in person but it also seems likely that this period will sadly see a rise in abuse of power of attorney by those closer to home.
In 2018/2019 the Office of the Public Guardian (“OPG”) made 721 applications to the Court of Protection concerning abuse of power of attorney and this is more than double the number of similar applications in the previous year. Such abuses more often than not see attorneys making decisions in their interests rather than in the best interests of the donor. The attorney may for example misuse the vulnerable individuals money or take out credit cards or loans in their name for their own benefit.
A lasting power of attorney is legal document designed to protect the maker enabling them to appoint a trusted third party (or parties) to act on their behalf in the event that they lose the capacity to make decisions for themselves. There are two types of lasting power of attorney – one covers health and welfare and the other property and financial affairs. A lasting power of attorney must be filed with the OPG while the maker still has full mental capacity.
Abuse of a power of attorney is generally revealed either on death of the vulnerable individual or at a point where a third party has sought to intervene by seeking the assistance of the OPG or the Court of Protection having becoming suspicious as to the actions of the attorney. In the case of the latter, if the evidential position is sufficient to support the concerns the likely outcome is that the power of attorney be revoked and a Deputy be appointed by the Court of Protection who then becomes responsible for the vulnerable individuals affairs (be it health and welfare or property and affairs or both).
In either case, once the abuse has been stopped urgent consideration will need to be given to the possibility of legal action been taken against the perpetrator. It may be necessary to report the attorney to the police for fraud or theft and/or pursue civil proceedings in an effort to recover and/or preserve the assets of the donor. Possible applicable civil action might be a claim for undue influence or a breach of trust and/or fiduciary duty claim and would extend to making an application for an injunction in order to prevent the perpetrator from disposing of, or dealing, with assets.
A Deputy would require authority from the Court of Protection to litigate on the donor’s behalf (it is often the case that the order appointing the Deputy will give them authority to investigate suspected financial abuse and if appropriate and in the best interests of the vulnerable person take action). Proceedings to recover misappropriated assets or for damages will most likely be pursued in the Chancery Division of the High Court.
Whether it is a Deputy or Executor that is tasked with investigating the financial abuse, the question of proportionality will be a central consideration in determining how far to pursue matters. It would not be in the best interests of the vulnerable individual, nor the beneficiaries of an estate, to aggressively pursue civil proceedings if the value of the potential claim does not justify the associated legal costs or the prospects of recovery are low (the assets have already been dissipated and the attorney does not have assets of their own against which to enforce an order). An application should be made to the Court of Protection or the High Court (as applicable) if there is any doubt as to how best to proceed.
Whilst the threat of abuse of an LPA is of course of very real concern the reality is that there are in excess of three million lasting powers of attorney reported by the OPG to be in existence and the majority see trusted loved ones caring for vulnerable adults when they are no longer in a position to make certain decisions for themselves. At this difficult time, those individuals will no doubt be exercising extra vigilance in caring for those that have trusted them implicitly to do so.
In the event that the worst should happen and there be suspicions that a power of attorney has been abused independent legal advice should be sought at the earliest possible opportunity to increase prospects of success in preserving and/or recovering the vulnerable person’s assets.
For further information on the issues raised in this blog post, please contact a member of our Wills, trusts and inheritance disputes team.
Katherine Pymont is a Senior Associate in our Dispute Resolution team. Katherine specialises in wills, trusts and inheritance disputes. Her experience includes challenging the validity of a wills, claims under the Inheritance (Provision for Family and Dependants) Act 1975, removal of executors and trustees and breach of trust claims.
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