Difficult decisions

One year on from the implementation of the Mental Capacity Act 2005 (MCA), and it seems clear that its widest public impact has been with Lasting Powers of Attorney (LPAs).

These are the public face of the new legislation and replace Enduring Powers of Attorney (EPAs). The latter were introduced in 1985 as a simple way of allowing one person the freedom to choose another person to make decisions in circumstances where the donor of the power lacked capacity, without involving an expensive and bureaucratic court process.

The problem of course is that a power of attorney that is too simple or too informal is also easy to abuse, whether through a failure to understand its purpose or through deliberate financial abuse. The measure therefore of the LPA is whether it strikes the right balance between ease of use and protection, and the first anniversary of its introduction is a suitable occasion to see if this has been achieved.

LPAs have unfortunately not been a success. The Public Guardian responsible for registration of the LPAs has suffered severe delays and administrative problems. Within six months of their introduction, only half of LPAs were being registered and returned within the performance standard of five working days after the end of the statutory registration period (Public Guardian Annual Report 2007/8). The forms themselves have proved overly long and unwieldy, further contributing to inefficiencies in the registration process. This is despite an assurance from the government minister responsible for introducing the forms that they were 'carefully designed on the basis of extensive public consultation and usability tests with the intention that many people will be able to fill them in without requiring legal assistance' (Bridget Prentice MP, Law Society Gazette, 25 October 2007). The Public Guardian had also assured us that the LPAs would introduce 'rigorous safeguards to help prevent abuse of the financial or health and welfare interests of vulnerable people' (letter from the Public Guardian to stakeholders 'Launch of the Office of the Public Guardian' September 2007).

Less than a year later however, a new public guardian has been appointed. One of his first acts was to launch a review of the prescribed form, while also making public apologies for poor service standards and promises to put things right.

Pitfalls of LPA forms

So how has it gone so wrong? There is no doubt that the prescribed forms have contributed to recent difficulties. The standard form EPA was a mere four pages long; the LPA that replaced it is 26 pages long. The forms take longer to complete, and contain several pitfalls. If the wrong box is ticked or a tick is left out, registration may be refused by the Public Guardian; if the form contains an inoperative provision that can be severed, it must be referred to the Court of Protection to remove the provision. All this takes time and adds to a sense of uncertainty. LPAs that may not need to be used immediately are sent for registration to ensure that they are correctly completed, further increasing the pressure on an overstretched administration.

The administration has also been stretched by the fact that more LPAs have been registered than was anticipated. This is largely due to the statutory requirement that an LPA cannot be created until it has been registered. By comparison, an EPA would function as an ordinary power of attorney for as long as the donor retains capacity. Many EPAs have therefore been used without needing to be formally registered. And because the EPA forms are simple to complete, many more are completed as simple insurance policies and put away for safe custody. It is impossible to make accurate comparisons between the two types of power of attorney because no one knows how many unregistered EPAs are in existence. However, the experience of most solicitors seems to be that far fewer LPAs are being made, but of those that are, a far greater proportion are registered.

The pressure to register LPAs early is inherent in the legislation itself. An LPA is ineffective until it is registered, and registration is bound to be a slow process. A person who delays registration may find that a decision needs to be made urgently, for example to sell a property to pay for care fees, but there is no authority to act. Assuming the administration works smoothly and there are no objections, the LPA cannot be registered until six weeks after the date on which the Public Guardian has sent out notices to the persons entitled to notification (Lasting Power of Attorney, Enduring Power of Attorney and Public Guardian Regulations 2007, para.12). Meanwhile, registration does not denote any lack of capacity on the part of the donor, so that the donor's rights and ability to make his own decisions is not compromised in any way.

This does of course represent a fundamental principle of the MCA: that capacity is function specific. An inability to make one decision does not prevent a person from being able to make other decisions, each of which should be assessed on its own merits. This does however lead to an obvious practical difficulty. By comparison, an EPA '“ which is registered on the grounds that the donor is or is becoming incapable '“ creates a presumption that the donor lacks capacity. While this may cause some inconvenience to a donor who still retains an ability to make some decisions, it protects a third party who can assume (in the absence of evidence to the contrary) that the donor cannot make a decision, and the attorney has authority to make that decision. With an LPA a third party such as a bank, stockbroker or solicitor is still protected, but at the donor's risk (MCA s.14). If instructions purport to come from the donor, there is no requirement to verify the donor's capacity; if instructions come from the attorney, there is likewise no requirement to verify their suitability. Thus an attorney, acting under an LPA may instruct a solicitor to sell the donor's home. The solicitor is not thereby aware whether the sale is necessary, whether the donor has capacity to make that decision or indeed whether the donor is away on holiday. (This is no different to a third party taking instructions from an attorney acting under an ordinary power of attorney, including an unregistered EPA. But such powers are rare and their use will often give rise to further enquiries). The attorney meanwhile may be unsure whether or not he has authority to make the decision if the donor is giving conflicting instructions.

LPAs do therefore provide attorneys with a great degree of latitude as well as a great degree of responsibility. The attorney needs to know whether he has authority to make a particular decision, and that the decision he makes is the right one. He must act in accordance with the 'best interests' criteria of MCA s.4. Where property is concerned, the attorney is also acting in a fiduciary role. If LPAs do provide any greater degree of protection compared to EPAs, it is only in the complexity of the forms. The certificate of capacity provides a very worthwhile independent assessment of the donor's capacity and understanding of the forms; the time and trouble involved in completing the forms should ensure that potential donors act cautiously and take advice. This does however assume that donors will take advice and that they and their attorneys fully understand the scope of the LPA they are making.

Recipe for chaos

The LPA forms themselves provide further pitfalls for the unwary. There are several options, restrictions and conditions that may make all the difference between a power being workable or unworkable. The most important is the choice of attorney. The LPA may need to operate for many years, or the donor may want to involve more than one person as an attorney; if so, these attorneys may be appointed jointly, or jointly and severally, or jointly in respect of some matters and jointly and severally in respect of others. The donor may also appoint a replacement attorney who will act if the appointment of the prior attorney fails on one of the prescribed grounds (MCA ss.10(8)(b) and 13(6)). This can be a recipe for chaos. For example a donor appoints his wife and daughter as attorneys jointly and severally in respect of welfare matters, except for decisions affecting life-sustaining treatment where they are appointed jointly. His nephew is the replacement attorney. On registration, the other children who are named as persons to be notified are informed of the registration by the wife and daughter. The nephew cannot be notified and is not aware that the power has been registered. (An attorney cannot be a named person (MCA sched.1, para.2(3)). On the death of the wife, the joint appointment fails and the nephew is sole attorney in respect of the most vital decisions that need to be made.

The choice of named persons to be notified of the registration is the other core safeguard in the registration process. However, it assumes that the donor has carefully and objectively considered who should be informed. A donor who is assisted by an overly helpful attorney may find that his family have no knowledge whatsoever that the LPA has been made. A donor may also find that when the time comes to register the LPA, the named persons have died or have themselves become incapable.

The act provides no default mechanism for family members to be notified, or for a minimum number of persons to be notified. Indeed it specifies that no one need be notified provided that the power contains two certificates of capacity (MCA sched.1 para.2(2)(b)). Even that safeguard can be avoided by the inclusion of an inappropriate named person, whose only qualifications are that he is not an attorney and that he is alive when the power is prepared.

There is no doubt that LPAs are less popular than their predecessors. The forms are cumbersome and unwieldy and the protection afforded by the act is only partially effective. The act assumes that all donors are capable of making informed choices when drawing up their powers, that they can read the extensive guidance literature or can obtain good cost-effective advice. It seems that the legislators have designed a process that meets their own expectations and in that sense, it offers some benefits. But in terms of finding the right balance between empowerment and protection, the new forms show a bias towards empowerment. That is a cause for concern, for while empowerment is important, it should not be at the expense of the protection of people who are inherently vulnerable when they place their property or their lives in the hands of another party.

It is perhaps still early to look for real solutions to all these problems. Improvements to the design and functionality of the forms and improvements to the registration process will help. However legislative changes will also be needed to remedy the problems outlined above. It would for instance be helpful to allow an LPA to be used once an application for registration has been made '“ on a limited basis in the same way as an EPA (MCA sched. 4 para. 1(2)). It would be helpful to require a replacement attorney to be a named person and for the other named persons to be notified of the identity of the replacement. There should be a provision for a minimum number of named persons with a default replacement of named persons from a statutory list of relatives.

There are simple and effective measures that can be introduced to make LPAs better and safer. In the meantime, it is essential for professional advisers to ensure that quality is never sacrificed for quantity. There will be fewer LPAs made, but they should be better. A client who will not pay for the time it takes to complete the form properly, ensuring that he fully understands the nature and effect of the power and has considered the options available, must take his affairs into his own hands and at his own risk.