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Frenkel Topping Deputy Day roundup

The financial adviser for victims of personal injuries and clinical negligence hosts its annual event for deputies caring for vulnerable people

12 May 2015

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Frenkel Topping has hosted its hugely anticipated annual Deputy Day conference.

The focus of this year's event was the freedom to choose; no doubt a popular topic, as the event had to be moved to a ballroom to accommodate the high demand for seats.

The event caters for deputies of incapacitated and vulnerable people, who are unable to manage their own personal, financial and domestic affairs.

Chaired by the winner of the Legal 500 Personal Injury and Clinical Negligence Silk of the year award, Andrew Ritchie QC, areas covered ranged from the management of a construction project at a client's house, the pitfalls of mishandling funds and, the growing pressure on deputies to ensure that the details of any financial structures they control are properly reported.

Here we go through some of the more prominent talking points raised at the event.

Capable unless proven otherwise

Satinder Hunjan QC, head of No5 Chambers' clinical negligence group, was keen to remind deputies that due to the Care Act 2014 which came into effect earlier this year (1 April), there is now a presumption that adults must be assumed to have capacity to make decisions, unless it is proved otherwise.

'There is a presumption of capacity', Hunjan said. 'A person must be given all practicable help before anyone treats them as not being able to make their own decisions.

'Just because you make an unwise decision does not mean that you lack capacity. If that was otherwise, most barristers would lack capacity, in my experience.'

Construction project management - take no risks

Both professional deputies appointed by the courts and those chosen by clients themselves are unlikely to be well versed in the management and delivery a construction management project.

Include the fact that deputies will always be held to account for any oversight or misuse of funds, Tracy Norris, partner at Withy King, and Dan Benham, president of the Royal Society of Architects in Wales, advised on the importance of carefully delegating work to qualified professionals.

Benham specifically warned deputies against the employment of non-specialised builders in the construction of an extension to a vulnerable client's home, and in the design and build of a new accessible home.

'Will they deliver the quality of space that the people who are going to use the extension or the new build deserve?' he asked.

'Are they aware of planning and building controls and lastly, are they aware of the CDM [Construction Design Management 2015] regulations?'

He went on: 'My advice is for deputies to surround themselves with a professional design team. If you don't do that from day one, the repercussions further along in the project can be absolutely severe and really hard to untangle. Make sure the right people are involved', Benham urged.

Typical design team structure

 

 

Pressures of transparency

In light of the United States wide reaching FATCA legislation, new OECD standards on the automatic exchange of information (AEOI) and, countless new financial information exchange agreements between countries and jurisdictions, this a clearly a bewildering phase in the drive towards global financial transparency.

George Hodgson, deputy chief executive of STEP, did have some reassuring words for deputies however, where he offered a robust and comprehensive guide as to what they should be aware of.

FATCA - Foreign Account Tax Compliance Act

'An account is not a reportable account if… the account is held to comply with an order or judgement made or given in legal proceedings'.

CRS - Common Reporting Standard

'Excluded accounts include … an account established in connection with…a court order or judgement'.

Draft UK guidance

'Excluded accounts include… an account held by a person appointed by the Court of Protection…'.

Trusts and AEOI (automatic exchange of information)

Hodgson also offered guidance on the reporting obligations under AEOI for trusts.

'All trusts are deemed to be entities', he explained. 'They are either investment entities or a FI [financial institution] or NFE [non-financial entities]'.

Hodgson added that the category that a trust will be placed in also depends on what assets are in the trust, and who manages it.

Given the tricky nature of isolating these facts, deputies were given a series of tests help define the type of trust they may be involved with. See below.

 

Test 1

Is the entity (i.e. the trust) carrying on business and is 50 per cent  or more of the entity’s gross income attributable to trading in money market instruments, foreign exchange and a range of other financial instruments, portfolio management or the investment and administration of funds?

Test 2

Is more than 50 per cent of the trust’s income attributable to investing, reinvesting or trading in financial assets?

If YES: Go to Test 3

If NO: Trust is NFE

Test 3

Is the trust ‘managed’ by a Financial Institution?

If YES: The trust is a Financial Institution (an Investment Entity)

If NO: Trust is NFE  

 

Professional negligence

As touched on above, deputies will always be held to account for the things a vulnerable client's funds have and have not been used for. They are the

Focusing specifically on the fiduciary responsibilities of a deputy and the types of behaviours which may lead to a professional negligence claim, Andrew Ritchie QC, highlighted that a deputy will not be liable if they are 'acting within the scope' of their authority.

Ritchie referenced Re EG (1914), where Buckley LJ commented: '[A deputy] is constituted agent by the court which appoints him… to do many things which will involve the employment of persons such as auctioneers, land agents, valuers and so on. As a matter of construction of the Lunacy Act, it seems to me impossible to say that he is to employ these persons on his own credit and become liable to them. He employs them as agent.'

Problems will arise when deputies begin to act outside of their responsibilities, as well as failing to fulfil their basic fiduciary duties.

'Common examples are failing to claim state benefits to which PP is entitled', explained Ritchie.

'Also, spending PP's money on things which do not benefit PP. Now this doesn't really apply to professional deputies, but my goodness it does apply to family deputies', he stressed, as he went on to defining case of Bashir v Bashir [2013].

He added: 'Finally the most difficult one which does apply to you is the conflict of interest with PP or PP's family. Making deals where the deputy or his family have a personal interest in the deal and receive a benefit is a minefield.

Breakout group sessions

Following the delivery of all of the talks, the deputies were broken up into groups and went into private 'breakout groups'.

The breakout groups have become a staple feature of Frenkel Topping's Deputy Day events. They are designed to act as a confidential space for deputies to discuss any concerns and personal experiences with professionals, and have become hugely popular.

Given the confidential nature of these discussions, PCA was not, of course, granted entry into the sessions. But having spoken to those who did attend and were able to share their experiences, the cathartic effect of the sessions was plain to see.

The breakout groups brought to an end what was a hugely insightful and successful conference, for a leading financial advice provider and patron for vulnerable clients.

 

Categorised in:

Vulnerable Clients Tax & Wealth structuring