Private client practitioners around the country welcomed the news that the Office of the Public Guardian (“OPG“) has finally amended its written guidance regarding financial Lasting Powers of Attorney (“LPAs“) to allow attorneys appointed under an LPA to more easily delegate investment decisions to a discretionary fund manager.
In 2015 the OPG updated its guidance to state that attorneys under an LPA for Property and Financial Affairs (a “financial LPA“) were unable to delegate investment decisions to an investment manager on a discretionary management basis unless the LPA contains specific wording permitting this. Discretionary management allows investment decisions, such as buying and selling shares, to be carried out by an investment manager or other regulated professional without prior authorisation, within agreed risk parameters. The benefit of such an arrangement is that investment managers can act quickly to take advantage of favourable market conditions to buy and sell shares quickly.
Before 2015, many financial LPAs did not contain this specific wording authorising discretionary management of the donor’s investments. In such cases, to avoid problems, if the person who had made the LPA (“the donor“) had capacity to amend the LPA, they could revoke their existing LPA and create a new one which included the required wording. If the donor had lost capacity to make a new LPA, however, their attorneys would have to apply to the Court of Protection to obtain retrospective authority. This was not a straightforward solution due to the expense and delays encountered with the court application, with such delays running the risk of causing loss to the donor’s investments.
The OPG has now changed its guidance so that donors who already have investments involving discretionary management are not obliged to have express wording in their LPA to allow their attorneys to continue or create such arrangements; instead, this is no longer a stated requirement but donors should seek legal advice on whether such specific wording is needed in their LPA. This is because at least one major financial institution still requires such wording to allow them to act, so advice should still be taken before making a new LPA or amending an existing one. Therefore, although the need for specific wording may still be needed in some cases, it is helpful that for the majority, the OPG accepts it will no longer be required. This will make it easier for donors with affected LPAs (such as those made before 2015) if or when they require their attorneys to act in future.