Protecting elderly clients

The last six months have seen some major developments in private client practice in respect of the elderly. This includes the Law Commission’s review of the deprivation of liberty safeguards (DOLS) and the ongoing problems with delegation of investment management by attorneys.

Review of the DOLS system

The Law Commission is recommending new legislation to replace the overworked DOLS system currently in place. This system prevents those without mental capacity from being detained in care homes and hospitals by local authorities in England and Wales without appropriate checks being carried out. The Mental Capacity Act 2005 (MCA) established this procedure, but the 2014 Supreme Court ruling in Cheshire West has extended the system to thousands more people. Consequently the system is breaking down.

The Cheshire West case set a precedent that people who lack the mental capacity to make decisions for themselves, whether as a result of dementia, learning disabilities, brain injury, or mental health problems, should have the benefit of regular independent reviews to ensure that their placement in a care home or hospital and any restrictions on their movement are still in their best interests. So, for example, a dementia patient may be kept in their care home to prevent them from wandering off, which could put them in danger. In 2016, 100,000 people who required the authorisation did not receive it.

The Law Commission reported that applications had gone up dramatically to 195,840 applications in 2015/16 from 13,700 in 2013/14. However, an increasing number of DOLS referrals are also being left unassessed and statutory timescales are being routinely breached. In England, only 43 per cent were completed in the year.The Law Commission is recommending replacing this system with the liberty protection safeguards. These include the following:

• Enhanced rights to advocacy and periodic checks;

• Greater prominence given to issues of the person’s human rights, and of whether a deprivation of their liberty is necessary and proportionate;

• Extending protections to all care settings, such as supported living and domestic settings;

• Widening the scope to cover 16- and 17-year-olds;

• Cutting unnecessary duplication by taking into account previous assessments;

• Extending who is responsible for giving authorisations from councils to the NHS if in a hospital or NHS healthcare setting; and

• A simplified version of the best interests assessment.

It has also recommended a wider set of reforms which would improve decision making across the MCA:

• All decision makers would be required to place greater weight on the person’s wishes and feelings when making decisions under the Act; and

• Professionals would also be expected to confirm in writing that they have complied with the requirements of the MCA when making important decisions, such as moving a person into a care home or providing serious medical treatment.

It remains to be seen whether these proposals will lead to changes in legislation, but clearly the rules need to be changed.

LPAs and investment management

On 7 September 2015, the Office of the Public Guardian updated its guidance in form LP12 with regard to an attorney delegating investment management. This states that the only circumstances in which someone must write an instruction is in a financial lasting power of attorney (LPA) if:

• They have investments managed by a bank and want that to continue; or

• They want to allow their attorneys to let a bank manage their investments.

It is recommended that all new LPAs should now include a specific instruction as follows: ‘My attorney(s) may transfer my investments into a discretionary management scheme. Or, if I already had investments in a discretionary management scheme before I lost capacity to make financial decisions, I want the scheme to continue. I understand in both cases that managers of the scheme will make investment decisions and my investments will be held in their names or the names of their nominees.’

The code of practice to the MCA 2005 now states at paragraph 7.38 that ‘the attorney must make these decisions personally and cannot generally give someone else authority to carry out their duties… But if the donor wants the attorney to be able to give authority to a specialist to make specific decisions, they need to state this clearly in the LPA document (for example, appointing an investment manager to make particular investment decisions).’

There has been considerable concern in the profession with regard to LPAs made before the guidance was changed. STEP has received comments on the difficulty of applying this guidance. It is also understood that it would like to present a test case to the OPG.

LPA registration fees

On 1 April 2017, the registration fee for a lasting or enduring power of attorney in England and Wales was reduced to £82. The fee for a repeat application to register an LPA was reduced to £41. Refunds are available for applications made at the old rate after 1 April 2017.

Multiple severance application decisions

In The Public Guardian’s Severance Applications [2016] EWHC COP 10 (published on 19 June 2017), the Court of Protection heard the cases of 17 electronic applications made by the Public Guardian for LPAs to be severed.

District Judge Eldergill stated at the outset that ‘it is important to emphasise that [the MCA] is an enabling Act and the Public Guardian and the court should be as enabling as is legally possible, a point made by Nugee J in Miles & Beattie v The Public Guardian [2015] EWHC 2960 (Ch) at para 19: “19 … it does seem to me that it is right that the Act should be construed in a way which gives as much flexibility to donors to set out how they wish their affairs to be dealt with as possible, the Act being intended to give autonomy to those who are in a position where they can foresee that they may in the future lack capacity to specify who it is that they wish to act for their affairs.”’

The district judge further explained: ‘It is always risky to depart from the statutory language when drafting forms and the adoption of the headings “Preferences” and “Instructions” in the forms introduced by the Amendment Regulations is potentially misleading.

‘The term “instructions” is not synonymous with “conditions or restrictions”.

‘Equally, the term “Preferences” is not synonymous with “best interests” or a donee’s duty when deciding what is in the donor’s best interests to consider anything written in section 7 of the form concerning the donor’s wishes, feelings, beliefs and values, and the other factors to be considered by their donee(s): see section 4(6) of the 2005 Act.’

This is a welcome addition to interpreting the LPA rules.

Ann Stanyer is a partner at Wedlake Bell and the author of Financial Abuse of Older Clients: Law, Practice and Prevention (May 2017, Bloomsbury Professional)

@WedlakeBell

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