Bulletins | October 5, 2017


A comparison of the protection against the threat of financial abuse given by LPA attorneys and Court of Protection deputies.


  • This article discusses what safeguards are in place to protect donors from financial abuse by their attorneys or court-appointed deputies.
  • It considers the recent statistics from the Court of Protection showing the significant volume of lasting powers of attorney (LPAs) now registered, and what problems this may create.
  • It also considers whether LPAs or deputyship offer greater supervision and protection from financial abuse.
  • Safeguards assist the Office of the Public Guardian in identifying problems at an early stage, and ensure recovery of estate funds. The issue is whether or not powers of attorney are providing the same protection.

The Mental Capacity Act 2005 (MCA) established lasting powers of attorney (LPAs). Clauses 9–14 stated that these are powers of attorney under which the donor (P) can confer on the donee(s) authority to make decisions about any or all of the following:

  • P’s personal welfare, or specified matters concerning P’s personal welfare; and
  • P’s property and affairs, or specified matters concerning P’s property and affairs. This includes the authority to make such decisions in circumstances where P no longer has capacity.

If an individual with property and finances does not sign an LPA and subsequently loses their mental capacity, the mechanism for protection is provided by deputyship under the Court of Protection (CoP). It requires a concerned third party (whether that be a relative, friend, local authority or professional) to step in and apply to act as the deputy. The appointment is made by the CoP after considering all the evidence, both medical and financial. The statistics from the 2016/17 annual report of the Office of the Public Guardian (OPG) confirm that there are now 57,702 deputyship orders being supervised.1 This represents an increase of 1 per cent from the year ending March 2016. There are 2.48 million powers of attorney registered with the OPG, including both enduring powers of attorney (EPAs) and LPAs. In the 12 months covered by the report, there were 648,000 new powers of attorney registered. Clearly, individuals are taking the trouble to execute LPAs, rather than relying on the state to step in and the CoP to appoint a deputy to manage their estate. The question arises as to whether or not those LPAs are sufficiently robust to provide the protections that donors expect.


The OPG’s 2016/17 annual report also shows that, in the 12 months covered, it received 42,730 requests, in the last year, to search the register of powers of attorney and deputyships; this represented a 41 per cent increase on the previous year. The OPG also reported that: ‘This year we investigated 1,266 cases, an increase of 45 per cent from the previous year, of which 272 resulted in an application to the CoP.’ What do these figures tell us? First, a search of the Public Guardian register will provide key information. There are two types of search: first tier and second tier. First-tier searches include the following details:

  • names or known other names;
  • date of birth;
  • name(s) of any deputy(ies)/attorney(s);
  • whether the LPA, EPA or deputyshiporder relates to ‘property and affairs’ or ‘personal welfare’;
  • the date the LPA, EPA or deputyship order was made;
  • the date it was registered;
  • the date it was revoked (if applicable);
  • the date the deputyship order expires (if applicable);
  • the date the deputyship order was cancelled (if applicable);
  • name(s) of any replacement deputy(ies)/attorney(s);
  • whether any replacement deputy(ies)/attorney(s) are active;
  • whether deputies/attorneys are appointed jointly or jointly and severally; and
  • whether there are conditions or restrictions.

A second-tier search will reveal additional information. Only information relating to the donor/client can be obtained through a second-tier search. The OPG will carefully consider the application before deciding whether additional information can be released. It will depend on factors including the applicant’s relationship to the case, the information requested and why there is a wish to access it. Any information provided will be at the discretion of the OPG and will vary depending on the case.


It used to be the rule that, when an LPA was executed, notice had to be given to someone other than the attorney with whom the LPA was being registered. This was designed to ensure that a concerned third party would have notice that the LPA was being activated by the attorney. This compulsory requirement was removed when new LPA forms were introduced on 1 July 2015. It is not known how many donors are now deciding not to give notice to anyone else. A search of the registers is now necessary to find out whether a vulnerable person has appointed someone to look after their affairs, or whether they need a court appointed deputy to be appointed. In this way, a bank, local authority or concerned individual can access key information. It could be argued that removing the need to give notice to another person provided a level of protection, and removing this safeguard has resulted in the significant 41 per cent increase in the use of searches. The increase could also demonstrate increased awareness of the importance of LPAs and deputyships in protecting elderly vulnerable individuals from exploitation and financial abuse.

The statistics from the OPG’s 2016/17 annual report also show a 45 per cent increase in cases investigated compared with the year 2015/16. Of those cases investigated, 272 resulted in an application to the CoP, compared with 151 in the previous year. This represented an increase of 80 per cent. Now, you would expect that, with the dramatic increase in the number of LPAs being registered, more attorneys are being empowered to manage finances for their donors. Similarly, this will have a knock-on effect on the number of attorneys falling foul of the MCA rules. However, the increase in cases investigated does also show that attorneys either do not understand the rules, responsibilities and limits of their powers or, even more worryingly, that they are taking advantage of their powers to misuse the donor’s funds and property for their own ends.


Each donor has to sign an LPA in the format provided by s10 MCA. This stipulates that an attorney must be either an individual who has reached 18 or a trust corporation. An individual who is bankrupt or is a person in relation to whom a debt-relief order is made may not be appointed as attorney of an LPA for finances. Where more than one individual is appointed, it must be stated whether they are to act jointly; jointly and severally; or jointly in respect of some matters, and jointly and severally in respect of others.


The donor chooses the individual who is to act as their attorney. Legal advisors would do well to spend some time with their clients discussing the suitability of their choices of attorney. It would be a useful starting point to consider the matters that are taken into account when the CoP decides the suitability of an applicant for a deputyship.

Such matters include the following:

  • What is their occupation?
  • How long they have been in that occupation?
  • Have they ever been convicted of a criminal offence?
  • Do they have a personal bank or building society current/deposit account?
  • Have they ever been refused credit?
  • Do they have any outstanding judgment debts?
  • Have they ever been declared bankrupt or the debtor under an individual voluntary arrangement under part VIII of the Insolvency Act 1986, or subject to a debt-relief order?
  • Has any business that they have been involved with (whether a company, partnership or otherwise) been subject to any insolvency regime?
  • Are they aware of any matter in which their financial interests may conflict with those of the person to whom the application relates (e.g. occupation of a property that the person owns, or any interest under the terms of their will)?
  • Are there any circumstances (personal or otherwise) that would interfere with their ability to carry out the duties of a deputy effectively (e.g. ill health or business/family commitments)?

Deputies, by contrast, have to be approved by the CoP, and are usually spouses, close relatives or concerned third parties, such as solicitors or the local authority.

Applicants for deputyship must also give undertakings, for example:

  • ‘I will ensure so far as is reasonable that the person to whom the application relates receives all benefits and other income to which they are entitled, that their bills are paid and that a tax return for them is completed annually.’
  • ‘I will visit the person to whom the application relates as regularly as is appropriate and take an interest in their welfare.’
  • ‘I will keep the money and property of the person to whom the application relates separate from my own.’
  • ‘I will keep accounts of dealings and transactions taken on behalf of the person to whom the application relates.’
  • ‘I will take reasonable steps to maintain the property of the person to whom the application relates (if applicable) – for example, arranging for insurance, repairs or improvements. If necessary I will arrange and oversee a sale or letting of property with appropriate legal advice.’
    An attorney, by comparison, is a matter of personal choice of the donor. Very often, the spouse and/or the adult children are appointed to act, but the attorney pool is unlimited provided that they are 18 or over. The only restrictions are against a person who is currently bankrupt or subject to a debt-relief order. A person who is on the Disclosure and Barring Service’s barred list also cannot act, unless they are a family member and are not being paid a fee to act as attorney.


To ensure that an LPA is fit for purpose, the donor should take time to consider what additional instructions they need to give to those attorneys, which will be legally binding on them. A suitable rider to the ‘Instructions’ section on page eight of the LPA form should set these out in full. As we have seen from the case of XZ v The Public Guardian, 2 the CoP will uphold detailed instructions, even if these seem more difficult from the OPG’s point of view. The donor’s LPA, in this case, included the following provision: ‘(1) Subject to the following provisions, no attorney (which shall for the purposes of these restrictions include any replacement attorney) shall have authority to take any decision under this Lasting Power of Attorney unless:

(A) My attorneys reasonably believe at the time of the decision that I lack capacity to take the decision (“the Relevant Decision”) myself and that there is a genuine financial need for the action which is under consideration; and
(B) Either: (i) a Psychiatrists’ Opinion has been issued, more than 60 days have elapsed since the issue of that opinion, the opinion is an Uncontested Opinion and, if a Contested Opinion has been issued previously, at least six months have elapsed since the issue of that Contested Opinion; or
(ii) my attorneys consider that the Relevant Decision should be taken as an emergency measure for the preservation of any asset or its value or the realisation of such value, and the value of the asset does not exceed CDN $25 million (twenty-five million Canadian dollars).’

Instructions must be workable, but, equally, the whole essence of an LPA is that the individual client should take the trouble to ensure that their LPA is suitable for their individual needs. As Senior Judge Lush explained in this case: ‘XZ acknowledges that his LPA will be less effective because of these provisions but, nevertheless, he wishes them to remain as an integral part of the registered instrument for his own reassurance and peace of mind. Some people may think that this is unwise, but it is his will and preference and it should be treated with respect. The Public Guardian has no right to make a paternalistic judgment on his behalf and decide that it would be in his best interests for these provisions to be severed.’

What is now essential, since the OPG changed its guidance, is that any donor with current or anticipated future investments should include an instruction permitting discretionary management. It is unfortunate, to say the least, that no test case has been brought, and that there has been no OPG updated guidance issued that would allow such discretionary management where this has not been included.


It is a matter for the donor as to whether or not they want to include personal preferences in the body of the LPA document. It would be better practice if each donor/client considered carefully what particular wishes, beliefs and preferences they would like their attorney to take into account in managing their affairs. Preferences are not legally binding on the attorney, but they should not be ignored either. It is unfortunate that the OPG makes the following statement on its online resource: ‘You can give your attorneys instructions or tell them your preferences in this LPA section – but you don’t usually have to. Most people leave
this page blank.’3 It would be far better for the OPG guidance to explain how helpful it is for a letter or statement of wishes to be prepared by the donor.

If a detailed letter of wishes was signed, then, as the Code of Practice states, it will be taken into account. Beyond this, it is to up to the individual donor either to take legal advice as to what is suitable for their particular financial circumstances, or to simply use the standard clauses offered by the OPG’s online resource. Here, the OPG suggests examples of typical preferences, which can also appear in a separate letter of wishes:

  •  ‘I would like to reinvest all interest from each year’s investments into next year’s ISA allowance.’
  • ‘I would like to maintain a minimum balance of GBP1,000 in my current account.’
  •  ‘I prefer to invest in ethical funds.’
  • ‘I’d like my attorneys to consult my doctor if they think I don’t have the mental capacity to make decisions about my house.’
  • ‘I would like to donate GBP100 each year to Age UK.’

These are extremely useful, whether or not the client has an LPA in place or a deputy is appointed to manage their affairs. The more detailed and specific the statement or letter, the more helpful this will be to the advisor. Such documents are not legally binding, but, taking the lead from s4(6) MCA, it is a requirement that a decision-maker consider, as far as they are ‘reasonably ascertainable’:

  • the person’s past and present wishes and feelings (and in particular, any relevant written statements made by them when they had capacity);
  • the beliefs and values that would be likely to influence their decision if they had capacity; and
  • the other factors that they would be likely to consider if they were able to do so.

Further, the code explains that a person trying to work out the best interests of a person who lacks capacity to make a particular decision (‘lacks capacity’) should, among other matters, try to ascertain the views of the person who lacks capacity, including:

  • the person’s past and present wishes and feelings;
  • any beliefs and values (e.g. religious, cultural, moral or political); and
  • any other factors the person would be likely to consider if they were making the decision or acting for themselves.


One of the missing links in the LPA process is the lack of supervision of attorneys by the OPG until some irregularity is detected. Clearly, it is understood that those who go to the trouble of executing an LPA are doing so at their own risk and are expected to sign a document that meets their own particular requirements. One could say that, if donors do not seek advice before executing an LPA – for example, by using the new LPA digital tool to create an online LPA – then that is not the fault of the OPG. Equally, we know that, from the statistics of the CoP, in cases reported in 2015, 85 per cent of financial abuse was perpetrated by attorneys, not deputies. These are, of course, only the cases that were reported.

The CoP case statistics and reports also arguably demonstrate that, were it not for the annual accounting and supervisory work of the OPG in respect of deputies, more financial abuse would take place and would not be so easily detected.

Annual accounting should be a mandatory requirement for attorneys managing a donor’s property and finance. Section 23 MCA states that the court has the power (where the donor lacks capacity) to give directions to the attorney to submit reports or accounts, and the production of records kept by them for that purpose, and require them to supply information or produce documents or things in their possession as attorney. It would be sensible for the OPG guidance to be updated and to stress the importance of keeping ongoing accounts and having those accounts audited independently each year. This seems a logical protective measure for not only the donor, but also for the attorneys.


There are further safeguards that automatically protect an individual where they have a deputy appointed, but that do not apply to an appointed attorney.
In March 2016, the OPG introduced a new and improved form OPG1024 for deputies. The OPG explained that ‘deputies will be asked to detail the level of contact they have with their client, how the client’s care is funded and whether the client is receiving all their entitled benefits. We’ve identified these key areas as early indicators that a client may be at risk of neglect or a red flag that the client is not receiving adequate support. If there are any inconsistencies, we can act quickly and investigate further.’

The form asks for the following:

  • Section 1: Deputy and client information.
  • Section 2: Decisions made over the reporting period. The deputy must report whether the client’s mental capacity has changed over the reporting period and also detail significant decisions taken, such as buying and selling property, making gifts and paying for care. The deputy must also detail who was involved in the decisions, and whether the client was involved.
  •  Section 3: People consulted, such as an accountant, solicitor or members of the client’s family.
  • Section 4: Safeguarding actions – how the client is cared for, what contact they have with the deputy and how their needs are being met. The deputy must state whether the client is getting the care that they have paid for and how this is funded. The form asks if there is a care plan and when was it last reviewed.
  • Section 5: Bank account details and funds.
  • Section 6: Client’s assets and debts.
  • Section 7: Decisions in the next reporting period. Here, the deputy has to explain whether there will be any significant financial decisions to be taken in the next reporting period, and whether the deputy has any concerns about their deputyship – for example, if funds are running low, or the wish to make gifts.
    These all help the court decide whether the deputy is running the client’s affairs in their best interests, or whether intervention by the CoP is required. There is no such comparable reporting for attorneys.


One of the other ways in which a person’s estate can be protected against unauthorised use or abuse is the provision of a security or surety bond. Whenever a deputy is appointed by the CoP, the order appointing the deputy will require them to take out a bond before the order is issued. Under regulation 36 of the Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007, the CoP must order the enforcement of the security, and the OPG must notify any person who endorsed the security of the contents of the order and notify the court when payment has been made of the amount secured. The OPG’s revised Practice Note SD155 explained what providers must understand about enforcement, as follows:

  • The CoP can call in all or part of the bond up to the limit secured. There is no requirement to prove fraud, and the loss may not be quantifiable.
  • The CoP may order an interim payment, i.e. that part of the bond is called in pending quantification of the loss.
  • The insurer must pay on demand without further investigation.
  • Notification will be via a CoP order.
  • It is expected that insurers will have the right to recover the amount they have paid out, plus their expenses, from the deputy. This is a matter for the insurer, in which the Public Guardian or CoP play no part.

A premium for an attorney bond paid out of the donor’s estate annually would give another layer of protection with a minimal cost.

Some simple measures could enhance the protection afforded by well-drafted LPAs. The donors who take the trouble to seek legal advice and have a well-drafted, considered power of attorney will be protected. Those who take no advice are the ones who are limiting protection and allowing themselves to be vulnerable to financial abuse. It is time that simple annual accounting and bond provision was extended to all active powers of attorney.

In my opinion, the OPG should be striving to enhance protections for donors of powers of attorney, rather than diluting them. The comments by the recently retired Denzil Lush in August 2017 should be a wake-up call for tighter controls. As I have indicated above, an annual accounting requirement, coupled with a surety bond for which the costs would be paid out of the donor’s estate, would identify financial abuse at an early stage and protect the estate.

Almost every week, there are further instances of financial abuse of the elderly reported in the UK national press. It is time to put the onus on attorneys to account for their actions. Such additional requirements will not be an imposition for most well-run attorneyships: they will already be keeping annual accounts. It is a small price to pay to combat what many practitioners in this area know is an increasing problem.


This was first published in the STEP Trust Quarterly Review, Volume 15, Issue 3, 2017