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Financial Abuse & Lasting Powers of Attorney

An LPA (Lasting Power of Attorney) is a great way to enable an individual to delegate powers to someone in order to act in their best interests, should they lack the capacity to do so themselves. This person acts as their attorney. The attorney has to act within the scope of powers set out in the LPA and within legal safeguards, such as the Mental Capacity Act 2005. Without an LPA, the process to enable someone to act on behalf of an individual who has lost capacity can become complex and expensive.

Due to the safeguards in place, the common scenario is that LPAs are used effectively without abuse. However, incidences of abuse of LPAs are becoming more common. This article seeks to explain why, and to reassure the reader that an LPA is still the way to go in ensuring their finances and welfare can be protected.

The LPA and its Safeguards

In July 2015, the Office of the Public Guardian (OPG) introduced a new version of the LPA Forms and registration procedure that was intended to be easier and simpler to complete. They did this in the hope that a more simple procedure would encourage more people to assign an LPA, as at the time only 15% of over 75’s had one.

One of the safeguards of the LPA is that a donor can name up to five people to be notified of its creation. This is considered important as it means that the named people can object to the LPA on specific grounds such as that of the donor being unduly influenced, pressured, or on the grounds of fraud.

A further safeguard is that the certificate provider needs to be involved in the making of the LPA and will have to confirm that the donor understands what they are doing and what the LPA entails. Further, the certificate provider must make an assessment on the donor’s mental capacity and certify that from their professional view, there is no fraud or undue pressure being used in order to induce the creation of the LPA. There is further guidance and questions a certificate provider may ask in the Guidance notes produced by the Office of the Public Guardian (OPG) in order to certify these points. Further, there is a list of people who cannot be the certificate provider, created in order to reduce the ability to abuse.

Finally, if an LPA is disputed once it has been registered, the matter can go to court and a Local Authority can make an investigation into the accusations.

Criticisms of the new LPA procedure

The main worry from the new, simpler procedure of registering an LPA rests with the certificate provider. Whilst it is the case that the certificate provider has to sign to confirm their opinion that the donor understands the process and is not being influenced in any way, the certificate provider no longer needs to set out their qualifications. This means that there is no way of checking whether the certificate provider has the relevant qualifications to understand what is required. So, whilst a genuine certificate provider would conduct their duties in an appropriate manner, the risk of abuse is greater when the certificate provider them self is fraudulent or simply negligent.

Further, prior to the changes being made, it was mandatory that at least one person be notified of the registration. If this did not occur, then a second certificate provider was required. Now, although the donor can choose to notify up to five people, they can also choose not to notify anyone. There is concern over this change, as it seems that coercion can slip through the net more easily.

The stats and their implications

There has been a rise in the removal of Attorneys (and deputies under Court of Protection orders). In 2013, 68 attorneys and deputies were removed due to allegations of theft or financial mismanagement. The number rose to 203 in 2014 and then dropped a little to 172 in 2015. The rise however is still a 153% increase in removals from 2013-2015. In the same period, the number of applications to register LPAs only rose by 73%. The statistics show therefore, that there has been greater number of investigated incidences of fraud and mismanagement.

On the face of it, these statistics appear to be quite worrying, especially when considering arguments that the new provisions of the LPA are too simple and welcome fraud. However, it must be considered that there has also been an increase in the number of investigations taking place into attorneys and deputies regarding financial wrongdoing. In 2015 there were 398 more recorded investigations than in 2013. This means, that although there are more incidences of financial wrongdoing, there are also more investigations taking place, so it could well be the case that there are simply more people ‘being caught’ than before. Looking at it this way, the system is in fact becoming safer, as its more likely financial wrongdoing will be spotted, and if it is, it is a matter taken very seriously.

The importance of LPAs

Having an LPA means that you have the reassurance that if you were to lose mental capacity one day in the future, your finances will be safe. They can be made with restrictions based on your own preferences, and can be made to require authority when an individual does still have capacity.

In a recent government survey, 80% of those interviewed said that they would be more likely to get an LPA if it were to make things easier for their family if they lost capacity. This is one of the main reasons why people choose to get an LPA. It means that if an individual does lose capacity, their finances can be easily accessed. As an LPA can only be registered when an individual has capacity, the alternative if they lose it is applying to the Court of Protection for deputyship. This is because there is no automatic right for the next of kin to make decisions on a person’s behalf. This is the same concept as an LPA- applying for the ability to control an individual’s finances- however it has a lot more restrictions and applying to the court can be a great deal costlier. Further, the individual has no input in the application, as they lack capacity. So, decisions, although still made in best interests, are made entirely on a person’s behalf. Further, during the process of applying for deputyship, bank accounts are frozen, which can create problems in terms of access to funds and the paying of bills.

Moving Forward

It is the case that financial abuse of LPAs may be more widespread than initially considered. However, this should not be seen as off-putting to register an LPA. The benefits of an LPA arguably well outweigh the risk of financial abuse and the prospect of what family members can be left to deal with if you do not have one registered. Whilst there are concerns over fraud, it is taken very seriously, and the increase in investigations should be seen as reassurance that something is being done to deal with the matter, rather than a concern that it is necessary. The process of making an LPA can be daunting at first, but it is in fact a relatively simple procedure, and a solicitor will always be on hand to help, to clarify confusion and to provide the relevant certification. Using a qualified solicitor also curtails the risk of the above-mentioned negligence or fraud of the certificate provider. An LPA assures an individual that decisions are going to be made in their best interests and acts as a great reassurance that there is a plan in place if an individual is to lose their mental capacity.

Making an LPA

To find out more about making an LPA, see our ‘Lasting Power of Attorney’ blog post which gives all the necessary information for making and registering your own LPA.

Article by: Tabitha McKie

For further information please contact Sadhana Joshi Tel: 0203 540 7665 or Make An Online Enquiry.

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