Fighting financial crime post Brexit: what next?
The recently retired Senior Judge of the Court of Protection, Judge Denzil Lush, caused a stir on the Today Programme last week by criticising the lack of safeguards in powers of attorney and saying that he would not sign one himself. Judge Lush also contrasted this with the appointment of a professional deputyship as a “safer” alternative .
What is a power of attorney?
A lasting power of attorney (LPA) is a legal document that lets a ‘donor’ appoint one or more people known as ‘attorneys’. Attorneys help a donor make decisions or they make decisions on their behalf when the donor can no longer make decisions for themselves. An LPA must be set up while a person still has capacity.
Judge Lush says that LPAs can be a problem. He says that there is a lack of transparency and accountability in the attorney relationship which can lead to an abusive relationship developing between donor and attorney. This can have a devastating effect on family relationships and commonly gives rise to disputes between siblings.
The high profile case of Frank Willett published in the national news last week would seem to support Judge Lush’s case. Frank Willett was a widower living in North Yorkshire who was suffering from dementia. In 2000, Colin Blake moved next door to the 78-year-old and assisted him with errands. After two years, a power of attorney was prepared, which gave Mr Blake full control of Mr Willett’s financial affairs.
Mr Blake withdrew large sums from Mr Willett’s life savings for his own use and in 2004, Mr Willett was moved into a care home. Mr Blake sold his home for £145,000 and sold or disposed of Mr Willett’s war medals, photographs and his late wife’s wedding ring. A large sum of money was placed into Mr Blake’s building firm and £70,000 was invested in land in France. Mr Willett’s care home bills were in arrears by this point.
Mr Willett’s daughter was distraught to find out about the abuse of her father. She said that Mr Blake had “cynically preyed on his confusion and vulnerability”. Her attempt to challenge the power of attorney in court failed and her repeated complaints to the Court of Protection were insufficient. Mr Willett died in 2009. Mr Blake has been prosecuted but it is unlikely Mr Willett’s assets will be recovered.
Judge Lush acknowledged the sad case of Frank Willett but stressed that this type of neighbour situation is fairly rare. He estimates that around 1 in 8 attorney relationships are abusive. Of these, almost 90% of abusers are family members.
What’s the alternative?
Judge Denzil Lush prefers the system of deputyship. A deputy is a person appointed by the Court of Protection to make decisions you cannot make for yourself. The deputy must always act in your ‘best interests’ (as also must an attorney) and must report a full list of assets and annual accounts to the Office of the Public Guardian (OPG) from the outset of the deputyship. The OPG will look at this report carefully and can ask questions or request further information. If they think the deputy is incompetent or abusing their position they will apply to have them removed. All deputies are also required to take out a security bond upon their appointment which is a form of insurance designed to pay out in the event of the deputy’s actions resulting in a loss to the client. There is simply more oversight and supervision under this system than is the case for LPAs.
With more and more people living long enough to lose mental capacity, an effective and safe way of allowing financial decisions to be made for those who lose capacity is a national necessity. The existing deputyship structure may not currently be geared to cope with the sheer number of cases of (usually) elderly persons losing capacity. Indeed, and ironically, the Power of Attorney was introduced, in part, specifically, to avoid the need to engage with a deputyship process commonly regarded as expensive, intrusive, and cumbersome. Deputyships had a rather bad press; the process is more expensive and slow than the creation and registration of the LPA. A power of attorney costs £82 to register, while the process of appointing a deputy will cost £500 in Court and OPG fees, up to £320 annually in supervision fees thereafter alongside any legal fees for making the application. If a professional deputy is appointed then fees for this service will also be paid (from the client’s assets) on an on-going basis but these are monitored and scrutinised by the OPG.
Judge Lush maintains that although professional deputyships will be more expensive they can be worth the money given the need to protect the elderly and vulnerable from financial abuse.
What should I do?
Despite the perceived risks, the LPA has proven to be a useful way of ensuring financial affairs can be handled quickly and effectively where capacity is lost. And the procedure whereby the LPA needs to be countersigned by a "certificate provider" (confirming capacity and desire to enter into the LPA), notice to interested parties, and registration with the OPG was introduced specifically to reduce the risk of abuse. Unfortunately, the system has yet to be perfected.
The choice of person(s) to act as attorney(s) remains key. Absolute trust is essential; unfortunately, experience seems to indicate that "absolute trust" in our own children may, in a significant number of cases, be misplaced. Conversely, where the attorney is a husband or wife, abuse is rare. Appointing more than one attorney may reduce the risk.
If you feel uncomfortable entrusting control over your financial affairs to anyone should you lose capacity, then you shouldn't create an LPA. Sensibly, you might take steps now to ensure that your financial affairs practically run themselves, and will continue to do so, even if you lose capacity. The impact of the delays necessarily involved in the deputyship process can be lessened or, indeed, removed if, by way of one simple example, all your outgoings are met by direct debit or standing order.
Peace of mind is everything; if in doubt, don't.
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