Attorney and deputy, beware!
The property and financial affairs lasting powers of attorney (LPA) document does not give much guidance as to the duties of an attorney when it comes to investment and general management of the donor’s money. Page 11 contains a statement that includes acceptance by the attorney of the duty:
- to keep accounts and financial records; and
- to act in the donor’s best interests.
The LPA document gives no guidance about investment of the donor’s funds.
The powers of a deputy are set out in their deputyship order, and will include the duty to keep accounts and act in P’s best interests. The deputyship order will usually include a power of investment.
The attorney and deputy must also have regard to the principles of the Mental Capacity Act 2005 and Code of Practice. Neither document is issued to the deputy or attorney on taking office, nor is any other help given.
Ignorance of these responsibilities, however, is no excuse, as recent Court of Protection decisions have shown. The cases involved attorneys but the issues are relevant to deputies.
In Re Buckley,1 Senior Judge Lush was critical of the attorney, who invested a significant part of the donor’s assets in her own reptile business (which flopped). The attorney tried to argue it was what the donor would have wanted, as she liked animals and wanted to help the attorney.
Senior Judge Lush stressed that, while an individual can make unwise decisions with their own money and need not keep accounts, an attorney (and a deputy) are under fiduciary obligations to act in a person’s best interests. He went on to refer to the duties of trustees when investing funds, including the need to:
- ensure the suitability of the investments;
- diversify investments;
- review and vary the investments as appropriate; and
- obtain and consider ‘proper advice’.
In this context, ‘proper advice’ means the advice of a person who is reasonably believed by the trustee to be qualified to give it by virtue of their ability and experience. Senior Judge Lush advised, generally speaking, that the advice should be given by a financial advisor of a firm regulated by the Financial Conduct Authority. These requirements are set out in the Trustee Act 2000. Senior Judge Lush acknowledged they do not directly apply to a deputy or attorney, but highlighted the common theme of fiduciary responsibility. It will be a brave person who ignores the Judge’s words.
Prior to 2007 and the introduction of the LPA and deputyship regime, there was specific investment guidance (Investing for Patients), which was used by the Court of Protection to outline how monies should be invested, depending on the age, health and assets of the donor. Sadly, this guidance was withdrawn and has not been replaced, and there is no recognised guidance or yardstick to use as a benchmark. Senior Judge Lush therefore set out in his judgment (at  and following) his updated suggestion for these guidelines in certain circumstances – and also hinted that the Office of the Public Guardian should produce updated guidance.
Senior Judge Lush indicated the need for the attorney to keep the donor’s assets separate from their own. He also stressed, wherever possible, that investments should be in the donor’s name, failing which the attorney (or deputy) should execute a declaration of trust to confirm the true ownership.
Alluding to Investing for Patients, Senior Judge Lush pointed out that the attorney (and deputy) must seek Court authority for:
- gifts that exceed the statutory authority (in Re GM  CoP Case 11843118, Senior Judge Lush expanded on what this might involve);
- loans to the attorney (or deputy) and members of their family;
- any investment in the attorney’s (or deputy’s) business;
- sales or purchases at an undervalue; and
- any other transaction where there is a conflict between the interests of the attorney (or deputy) and the donor/P.
The Judge ordered that the attorney be removed and advised: ‘Ignorance is no excuse… [an attorney] should at least be familiar with the “information you must read” on the LPA itself and the provisions of the Mental Capacity Act 2005 Code of Practice.’
- 1 CoP Case 12228697
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