Power of attorney challenges up 55%

Power of attorney challenges up 55%

More people than ever before are being taken to court over misuse of lasting power of attorney, research has shown.

Data, obtained by law firm Nockolds and published today (October 7), showed the Office of Public Guardian made 721 applications to the Court of Protection to remove or censure LPAs in 2018/19 — 55 per cent more than the previous year and a record high.

The findings also showed this figure had doubled over the past two years and that making improper gifts and not acting in a vulnerable person’s best interests were the two main reasons for having attorneys censured and removed.

The data showed the OPG had launched 2,883 safeguarding investigations in 2018/19, an increase of 54 per cent compared with the 1,871 measured the year before.

According to Nockolds, it was likely most misconduct by attorneys didn’t come to light during the donors’ lifetime and prosecutions and investigations of attorneys by the OPG represented only the “tip of the iceberg”. 

Court action against people acting with power of attorney:

Source: Nockolds

The number of consumers taking out LPAs has increased at the same time however, as data released in April showed the number of people signing over financial control has more than tripled in the past five years.

In the OPG’s latest report for 2018/19, it stated it now received a similar number of LPAs in a month as it was originally forecast to receive in a year. 

Data from advice firm LEBC showed 800,000 LPAs were executed last year, an increase of 6 per cent on the previous year.

But Peter King, partner at Nockolds, said: “The sharp rise in legal actions against attorneys is vastly greater than the increase in the number of attorneys on the register, which suggests that there are some fundamental questions about how the current system operates and whether there are sufficient safeguards at the point at which people register.

“Many LPAs are now created without any professional advice. With most banking now conducted online, there is little to no oversight of the transactions that take place, which leaves the system wide open to abuse.”

Kay Ingram, director of public policy at LEBC, said although arranging an LPA online without professional help seemed wise due to the lower fees, she thought it was a “costly mistake” if the attorney was not aware of the limitations on their power and the need to always act with the donor’s interests in mind.

She added: “Financial planners also have a key role in assisting attorneys to understand their role better and to protect the donor’s interests. 

“Donors should be included as potentially vulnerable within a firm’s vulnerable client policy and IFAs need to be ready to challenge any actions which appear not to be for the donor’s benefit.”