Lasting Power of Attorney and the Proposals for Reform
22nd November 2017
There has been a lot of press recently about Lasting Powers of Attorney (LPAs).
First there was Denzil Lush, the former Senior Judge of the Court of Protection who, as was reported in the Financial Times, said that people should be far more aware of the risks involved in power of attorney arrangements.
Then there were the proposals announced by the Financial Conduct Authority (FCA) which would see the current pen and paper signature scrapped and replaced by a fully online process.
But what exactly are LPAs? Why do we have them and isn’t a fully digital system a good thing?
An LPA is a legal document where you as the Donor appoint someone (usually close relatives or friends) to be your Attorney(s) (and possibly Replacement Attorney(s)) to make certain decisions on your behalf including when you lack mental capacity.
There are two types of LPA:
- A Financial LPA which allows your Attorney(s) to make decisions about paying bills, dealing with the bank, collecting benefits, selling your house, etc; and
- A Health and Care LPA which allows your Attorney(s) to make decisions regarding treatment, care, medication, where you live, etc.
For example, if you have made a LPA and have an illness, or an accident, that then stops you from making decisions, a Lasting Power of Attorney would ensure that the person you have chosen now has the responsibility to make the decisions for you.
If you haven’t made a LPA, the Court of Protection would need to get involved to decide on your mental capacity and who is best placed to make decisions on your behalf. Someone would need to apply to the Court to be appointed as Deputy. This is a slow process, taking 4-6 months once the paperwork has been completed, and while awaiting the outcome your affairs may be in a state of limbo. Preparing an LPA in a timely fashion could therefore also save your family a lot of stress, pressure and unnecessary expense. It also ensures that you have chosen who will make decisions on your behalf should you lose capacity.
What about the proposals for reform of LPAs and the digital signature?
We welcome any improvements in making processes easier for clients and on the surface making the registration of a Lasting Power of Attorney fully digital sounds like a good idea. After all, it should make it easier for people to apply?
The problem is, as the organisation Solicitors for the Elderly have highlighted, that it might make it easier for people to commit fraud and therefore make it easier to carry out financial abuse on the elderly. At present, getting a lasting power of attorney in place requires a wet signature (where a person physically signs the document by hand) and a witness. Our concerns with the proposals are that making the process fully online means that you would no longer need a ‘wet signature’. Removing that layer of protection means that there is a risk that a LPA could be registered on someone else’s behalf maybe without them even knowing.
David Sinclair, chairman of Solicitors For The Elderly is quoted as saying: “The FCA’s vision of a secure, end-to-end digital LPA registration process is simply not possible. What is to stop a family member or friend registering a document on someone else’s behalf, perhaps even without their knowledge? The prospect of being able to take control of someone else’s bank account and even their property with a few clicks of a button is frankly reckless.”
Most importantly if you are considering making a LPA, it is very important to make sure you understand what it entails, what powers the attorneys will have and any risks.
If you require any assistance, please give us a call on 024 7653 1532.