On 15 August 2017, the BBC ran a story about powers of attorney arising from comments made by Denzil Lush, who retired from his position as Senior Judge of the Court of Protection last year, in an (as yet unpublished) foreword to a new edition of a book he edits. The headline on the BBC site was ‘Warning over power of attorney risks’. This article attempts to clarify and expand on some of the points made and to provide further information about the issues raised.
What are lasting powers of attorney?
The BBC article states that ‘the enduring or lasting power of attorney is a legal document which allows someone to make your financial decisions when you can no longer do so’. In fact, a lasting power of attorney for finances can be used whether or not the donor lacks mental capacity to make his or her own decisions – they can be used, for example, by people who are planning to go abroad and need someone in this country to manage their property or financial affairs for a period of time, people who are physically impaired, or those who have just lost interest in managing their own finances, as well as by people who anticipate losing capacity in the future.
The article does not explain that new enduring powers of attorney can no longer be created but that those created before 1 October 2007 can be registered and used, nor that since the Mental Capacity Act 2005 came into force on 1 October 2007, there are two different types of power of attorney: lasting powers of attorney that give authority to make decisions about finances (whether or not the donor has capacity), and lasting powers of attorney that give authority to make health or welfare decisions (which apply only when the donor loses capacity). It appears that Denzil Lush’s comments and concerns relate to financial LPAs. This is perhaps unsurprising, as financial cases comprised the bulk of the cases that he dealt with as Senior Judge, indeed, when he was first appointed as Master of the Court of Protection in 1996 the Court dealt only with the property and affairs and not the personal welfare of adults who lack mental capacity to make decisions for themselves.
LPAs have more safeguards than enduring powers of attorney, in particular the requirement for a “certificate provider” to participate in their creation and be satisfied that the person creating the power both has the mental capacity to do so and has not been subject to fraud or undue pressure in creating the power. This is a sort of notarial requirement, relatively unfamiliar in English law, and LPAs are the only English legal documents intended to be used by private individuals which have a requirement like this. Some commentators have suggested that there should be a tighter restriction on who can act as a certificate provider, limiting it to people with appropriate professional knowledge only, and excluding non-professional friends and acquaintances (see further below).
Is a court-appointed deputy equivalent to a lasting power of attorney?
The failure to differentiate between the two types of LPA is important, because a concern raised by Denzil Lush was that people were being led by the Ministry of Justice and its agency, the Office of the Public Guardian, to believe that an LPA was preferable to a deputy being appointed by the Court of Protection once the person loses capacity to make their own decisions, as the deputyship system provides greater safeguards. Interviewed on the Today programme on 15 August, he suggested that although a deputy order was more expensive, it was likely to be a better option. The general thrust of the coverage was that deputyship and lasting powers of attorney achieved the same objective of substitute decision-making, but that lasting powers of attorney were more vulnerable to abuse.
This may or may not be right in relation to financial LPAs (see further below), but is potentially misleading in relation to health and welfare LPAs. A health and welfare LPA can give the attorney the power to make decisions to give or refuse consent to medical treatment including life-sustaining treatment. For example, if in the recent case in the Court of Protection Paul Briggs had created a health and welfare LPA appointing his wife as his attorney, she would have been able to decide whether his artificial nutrition and hydration should have been continued when he was diagnosed as being in a minimally conscious state.
A health and welfare deputy appointed by the Court of Protection cannot give or refuse consent to life-sustaining treatment. The two types of substitute decision-maker are not equivalent, and it would be wrong to think that where health and welfare decisions are concerned, a deputyship order could be obtained after a person loses capacity to enable a family member to assume the role of decision-maker.
What are the problems with lasting powers of attorney?
The BBC news article quotes the ex-judge as saying that powers of attorney can have a ‘devastating’ effect on family relationships and that the “lack of transparency causes suspicions and concerns which tend to rise in a crescendo and eventually explode”.
It is not entirely clear what the ‘lack of transparency’ concern refers to – it could be a number of features of LPAs including the following:
- There is no obligation to tell particular family members or indeed anyone at all, that an LPA has been created and an application for registration made at the point where the LPA is registered by the Office of the Public Guardian.
- There is no publicly searchable online database of registered LPAs and it can be difficult to find out in a timely manner from the Office of the Public Guardian whether one has been registered.
- Unlike a deputy, an attorney does not have to file annual accounts with the OPG, nor is the attorney’s work supervised by the OPG or the Court of Protection unless the Court makes an order for the attorney to produce documents or a report.
Of course, there are many hundreds of thousands of LPAs which are used each year that do not result in devastating effects on family relationships, and there are other reasons why an LPA may be preferable to a Deputyship order, none of which are discussed in the BBC coverage:
- A Deputyship order is considerably more expensive than an LPA. The BBC article quotes an annual cost of £320, but this is not the full picture. An application to the Court of Protection to appoint a deputy currently costs £400 (by way of the application fee) and the application process is more complicated than for an LPA, requiring various forms to be completed including medical evidence of a lack of mental capacity for which charges of £250 are common. If the judge decides a court hearing is required, that triggers a court fee of £500, and the costs of legal representation if anyone chooses to instruct a solicitor to act for them. There is then an annual supervision fee to be paid by a deputy of £320 a year (unless the person’s estate is worth less than £21,000) plus an extra payment of £100 in the first year of the deputyship order. The Deputy must also purchase a security bond, paid for out of the incapacitated person’s funds, as a form of insurance, so that if he or she does misuse the person’s money, it can be recovered more easily. For an estate worth £300,000, the security bond is likely to cost £500 or more. In contrast, an LPA costs £82 to register and there are no ongoing charges, unless the person making the LPA has authorised an attorney to charge for their work. Although an order of the Court of Protection appointing a deputy will usually give the deputy fairly comprehensive powers to deal with the incapacitated person’s property and affairs, it may exclude some decisions, such as selling the person’s house, which will then require a separate application to the Court and all the costs associated with that.
- A person who knows they are likely to lose capacity (for example following a diagnosis of dementia) may wish to have peace of mind by ensuring that a person they have chosen will be able to act on their behalf when necessary. A deputyship order cannot be applied for until the person has lost capacity to make the relevant decisions for themselves and while it is likely that the court will appoint a family member who applies to be made deputy, it cannot be guaranteed – the identity of the Deputy is the court’s decision, not that of the person who has lost capacity. Some family members find that having to deal with the Court of Protection is stressful at an already difficult time – see for example this account http://www.farsightwills.com/lasting-power-of-attorney/heather-bateman-story/ . The delay in getting a deputy order may also be a problem – an unexpected loss of mental capacity could be swiftly followed by the need to make important medical treatment or welfare decisions, leaving doctors and other professionals as the default decision-makers.
Should lasting powers of attorney be encouraged?
The BBC article refers to Denzil Lush’s criticism of the Ministry of Justice’s promotion of LPAs without simultaneously promoting the benefits of deputyship. Interestingly, back in 2009, the Daily Mail published this article about how the ‘secret’ Court of Protection was seizing control of vulnerable people’s assets by way of deputyship orders because not enough people had made advance plans by creating LPAs.
It is correct that the government has promoted the use of LPAs since the Mental Capacity Act came into force. When the House of Lords Select Committee looked into the implementation of the Mental Capacity Act in 2013/2014, it reported comments from Senior Judge Lush (as he then was) that ‘in his experience of financial abuse cases, attorneys and deputies showed a distinct lack of knowledge of the Code of Practice: “most attorneys and deputies are unaware that it exists … almost none of them are interested” and that he was ‘”dismayed” at the extent of financial abuse that was emerging, particularly by close family members.’
The House of Lords Select Committee nevertheless concluded that public awareness of the benefits of LPAs need to be raised to encourage greater take-up, and did not make any recommendations about enhancing safeguards for LPAs. The BBC article quotes the Ministry of Justice as saying that investigations by the OPG have increased significantly – although the details are not given. The Office of the Public Guardian publishes statistics in its annual reports. We commented in late November last year on sensationalised newspaper reports of the figures in the 2015-6 report.
The most recent OPG report states that there are currently 2,478,758 registered enduring and lasting powers of attorney, 648,318 having been registered in the year 2016-7 year, and that there were 57,702 current deputyships as at 31 March 2017. The report goes on to state that the OPG received 5,327 safeguarding referrals during the year, which is a decrease on the previous year, accounted for by a change in methodology. The figure is now made up of only those cases which have been passed to the OPG’s investigations team, or “signposted”, which we assume means that some sort of flagging record is set up for the OPG’s internal use. The report says
“This year we investigated 1,266 cases, an increase of 45% from the previous year, of which 272 resulted in an application to the CoP.”
The investigations figure is about 0.05% of the number of current registered powers of attorney, and even smaller if deputyships are included. This is a very different picture from that suggested by former Senior Judge Lush, who is quoted as saying:
“I nailed my colours to the mast in 1998 when I suggested probably in one in eight cases there is abuse. I don’t think anything over the last 20 years has made me change my opinion on that.”
On current figures, this would mean that there were c.300,000 cases of abuse out of the c.2.5M registered powers, more than 200 times as many as those actually investigated. As Denzil Lush acknowledged in his interview “we have no real research as to the extent to which abuse is going on”, so his figure is speculative, and real research would be welcome. In the absence of research, it would be desirable if the media at least made the known and reported figures clear, rather than developing speculation into sensationalist headlines. The BBC’s story was picked up by several national newspapers the following day, with the Daily Mail using the headline “One in eight elderly people become victims of fraud when they let their family or friends control their cash, says top judge” and the Telegraph writing “Hundreds of thousands of power of attorney situations likely to be abusive, a retired senior judge has warned” in a tweet linked to its story.
The Daily Mail’s story also described Denzil Lush’s remarks as “the latest blow to Labour’s controversial Mental Capacity Act, the 2005 legislation that was meant to reform and simplify the law governing the lives of those too ill to make decisions”, and describes the Court of Protection as “the branch of the High Court dealing with disputes over vulnerable and frail people and its business is almost always conducted in secret”.
As The Transparency Project has written in previous posts on the Daily Mail’s coverage of the Court of Protection, there is a confection of misleading errors here. Although the Mental Capacity Act both received royal assent and came into force under a Labour government, it is not in any way a political measure, and its provisions are very closely based on work by the Law Commission which was largely undertaken in 1995, under the previous Conservative government. It does not deal with the affairs of people who are simply “elderly” or “too ill” or “vulnerable and frail” but with those adults who have been found, on persuasive clinical evidence, to lack capacity to make decisions for themselves. Far from being “secret” it is the subject of a continuing transparency pilot (meaning that almost all hearings are now held in public) and practice direction in relation to the publication of judgments, about which we’ve also written in previous posts.
The main BBC article and an associated article published online by the BBC the same day focused on the case of an elderly man with dementia whose property and assets were stolen by a neighbour to whom he had granted a power of attorney. This was undoubtedly a terrible case of financial abuse and the attorney was eventually jailed earlier this year (although the man had died in 2009 and the financial abuse appears to have taken place in the early 2000s, before the Mental Capacity Act came into force). But would the situation have been any better with a deputyship order, or with no LPA in place? The BBC articles show that there were various points at which existing safeguards should have worked to protect the man from the attorney, including the visit to a solicitor at which the man, who was suffering from dementia, purported to make a new will leaving his assets to the neighbour instead of his family; referrals to the Office of the Public Guardian, and even, it appears, a hearing in the Court of Protection at which the attorney was ordered to provide annual accounts but was not removed. Perhaps the more interesting question is why it took five years for any of the safeguards to work.
There is also evidence that deputies can financially abuse the people whose finances they are appointed to manage. In the case of Gladys Meek, Senior Judge Lush removed two family member deputies who had been spending their great aunt’s money on lavish gifts for themselves and members of their family. The case only came to court because the Office of the Public Guardian visited the deputies and suggested they apply to the court for retrospective approval of the payments, which they duly did. Fortunately the security bond was slightly more than the value of the payments made by the deputies which the court declined to authorise retrospectively.
What further safeguards might be needed for LPAs?
There certainly are good arguments in favour of enhancing the safeguards in place in respect of LPAs to ensure that people are not coerced into signing them and that attorneys do not misuse the person’s funds. The following section of this article makes some suggestions about these issues, which the BBC and other media may be interested in following up.
Structural changes to lasting powers of attorney inevitably involve a shift in the balance between protecting a minority of people from abuse of a power by an attorney, and imposing a burden of regulation and compliance which will be excessive for the non-abusing majority of people lacking capacity and their attorney(s). However, there are a number of aspects of the existing structure for creating and registering lasting powers of attorney which could be better known, and some proposed changes which would not necessarily shift the balance from where it is at present. These include:
– limiting eligibility to act as a certificate provider to exclude friends and acquaintances
– making the role of certificate provider more rigorous, for example by requiring the certificate provider to complete a set of questions and answers rather than merely sign a declaration
– requiring medical certification of capacity at the date of creation of an LPA. Many adults in mid-life might find this onerous and pointless, however, but it is difficult to envisage a practical way of limiting such a requirement to borderline cases only.
Although the core content of the lasting power of attorney forms is prescribed, they offer a great deal of flexibility to people creating them to make something which suits their needs as closely as possible.
In particular, as far as property and affairs lasting powers of attorney are concerned:
- The person creating the power can choose who is to be their attorney or attorneys, and if more than one, how far they should make decisions jointly and how far they should be allowed to make decisions separately. They can also choose a replacement attorney to step in, in the event that an original appointee is unable to act.
- The person creating the power can decide whether their attorney(s) can use it as soon as it is registered, or only when and if the person creating the power doesn’t have mental capacity.
- The person creating the power can choose whether or not up to 5 people can be notified of an application to register an LPA, so that they can raise any concerns about it. This is entirely optional. It used to be not only compulsory, but before the Mental Capacity Act came into force, the people to be notified were identified from a fixed kinship list without any choice at all. When LPAs were first introduced, notification was still compulsory, but there was an entirely free choice of persons to be notified, and some people chose e.g. the Prime Minister or someone else entirely unconcerned with their welfare, simply in order to comply with this requirement.
- The person creating the power can include what are called “preferences and instructions” on the standard form, more technically known as “restrictions and conditions”. These give really important powers of flexibility which allow people to shape how a lasting power is used, but they aren’t unlimited, and there have been numerous cases exploring and establishing what can and can’t be done with them, including the recent Public Guardian’s Severance Applications  EWCOP 10
The OPG’s guide says “most people leave this page blank”. This is a pity, because of the opportunity these provisions offer, if correctly worded, to include safeguards against financial abuse by an attorney. For example, attorneys can be instructed to use professionals to prepare annual accounts and tax returns, or to circulate annual accounts to family members or professionals so that they can see how the attorney has been dealing with the person’s property and affairs. There are a number of further examples in the OPG’s published guidance.
The most tangible benefit of appointing a property and affairs deputy over a property and affairs attorney is the requirement for a security bond to protect the person who lacks capacity in the event of loss caused by the deputy. One possible reform might be to introduce at least a voluntary scheme of security bonds or insurance for lasting powers of attorney. There would be practical issues to overcome. The level of security for a deputy is fixed by the Court of Protection at the time of the deputy’s appointment and takes into account both the value of the assets of the person who lacks capacity, the extent to which they are at risk (a half-share of a house registered in joint names is at much less risk than a building society deposit, for example), and personal risk factors relating to the deputy him or herself, in particular, the extent to which a professional deputy’s professional indemnity insurance would be available to meet any default. In order to create a workable scheme for attorneys, it would also be necessary to have a scheme for declaration of assets and of personal risk factors relating to attorneys, either on registration or on subsequent loss of mental capacity, and this is clearly less straightforward than the mechanism in place in relation to deputies.
The BBC articles and coverage and further newspaper coverage were helpful in that they raised awareness of lasting powers of attorney and deputyship, but could have been clearer about certain critical matters:
- That financial LPAs are different to health and welfare LPAs and that the latter are not equivalent to deputy orders made by the Court of Protection
- That deputy orders are significantly more expensive than LPAs and that there is an inevitable delay between the onset of mental incapacity and the appointment of a deputy
- That there are a number of reasons why people might prefer to appoint an LPA rather than obtain a deputyship order from the court, in particular the fact that attorneys are chosen by the person to act for them, but a deputy may not be someone whom the person would have chosen if they were able to do so
The coverage could also usefully have provided links to sources of further information such as the website of the Office of the Public Guardian at gov.uk, and the Mental Capacity Act Code of Practice. In particular, the OPG publishes a recently-revised guide to making and registering a lasting power of attorney, which has an enormous amount of useful content, including “Questions to ask yourself” and examples of how choices should be worded. Perhaps many people are unaware of the existence of this guidance, and there is a pressing need to have it highlighted or publicised more extensively, or reproduced in a more graphic format, or in the sort of example-based detail used by the Mental Capacity Act Code of Practice.
Feature Pic courtesy of shadowmother on flickr – thanks.