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The Impact of Lasting Powers of Attorney

It's hard to believe it's two years since the arrival of Lasting Powers of Attorney (LPAs).  LPAs were introduced in October 2007 (during the implementation of the 2005 Mental Capacity Act) to replace Enduring Powers of Attorney (EPAs).  The Mental Capacity Act made big changes to the Court of Protection and in the way our affairs are dealt with in the event we became unable to look after our own finances.  This might be because of an accident, dementia or another degenerative illness that effects our capacity to make decisions. 

I was therefore interested to read an article by Stephen Ellis in a recent Saturday Daily Telegraph about the impact of these changes.

By way of background, the Court of Protection exists to hear cases involving those who have become unable to look after all their own affairs but who (generally) had not previously put in place an LPA or EPA.  Broadly, its role is to make decisions on behalf of individuals (sometimes where there is dispute over what is in their best interests) who lack capacity themselves to make a decision and/or appoint a deputy to act for the individual concerned.  Deputies can range from family members, to solicitors or even to the local authority. 

According to Stephen Ellis, “the Court of Protection dealt with about 23,000 cases in each of its first two years, assigning responsibility for assets totalling £3.2 billion.  The Office of the Public Guardian (OPG) [the executive agency responsible for administering deputyships and registrations of LPAs and EPAs] charged a total of £23m in fees for overseeing the activities of deputies and has attracted more than 2,300 complaints…”

Stephen goes on to point out that experts are warning older people that their loved ones could face a nightmare of bureaucracy and expense, if they do not have a LPA or EPA in place and become mentally incapable of managing their own affairs.

LPAs (and EPAs that were validly executed before 1 October 2007) ensure that an individual (whilst they have capacity) is able to decide exactly who they would wish to handle their affairs in the event they are unable to do so.  Without an LPA, if you lose your capacity to make decisions, the Office of the OPG has a signigicant involvement.  That’s when it starts to get expensive.  Just to start with, the OPG can often charge an annual fee of £1,000 for supervision.  There is also the cost of the annual premium for the Deputy’s compulsory security bond and (often) solicitors’ annual administration fees on top of that.

Furthermore, (depending on the level of supervision that the Court of Protection imposes) your deputy may have to seek agreement from the Court/OPG before they are able to invest or spend significant sums of money on your behalf for your benefit.

I don't want to be too negative about the Court and the OPG.  They have greatly improved their levels of service over the last 12 months.  The improvements, I think, are largely down to the efforts of the new Public Guardian, Martin John.  He is young, very dynamic and genuinely wants to deliver improvement and innovation.  Also, such criticism can easily drift into “why oh why....." territory without offering any solution.  Fan as I am of the Mail on Sunday, its recent front page article about the Court (you know the sort of thing: “…threat to house prices from failures at OPG....”) contained only an ounce of accuracy and was far from constructive.

However, such articles clearly hit a raw public nerve about fears concerning state interference, lack of control and rampant costs.  Here is an example in the form of a comment about the OPG on http://www.guardian.co.uk/: “… posters on an internet forum have complained of "bullying" letters and "being treated like a criminal" after being deemed unsuitable to look after their relatives' affairs.”  Moreover, whatever improvements there have been at OPG, they started from the lowest possible base.

Putting in place an LPA is more time consuming and costs more than the old EPA.  However, if you want peace of mind, you want to cap the costs of administering your affairs if you lose capacity and you want your loved ones in full control at that time, I recommend you ask your legal advisor about setting one up as soon as possible.