Don’t shoot the deputies

Where a person, referred to in the Mental Capacity Act 2005 (MCA) and in this article as ‘P’, no longer has mental capacity to manage his or her own property and affairs, but did not make a power of attorney whilst he or she had capacity, it is often necessary for an application to be made to the Court of Protection (COP) for the appointment of a person, known as a deputy, to make day-to-day decisions about and to manage and supervise P’s property and affairs.

A deputy can also be appointed to deal with P’s health and welfare, but the focus of this article is property and affairs deputyships.

Appointment of a deputy

A decision as to whether to appoint a deputy is one that must be taken in P’s best interests. Section 4 MCA 2005 provides a checklist of factors that anyone, including the Court, making a decision must consider when deciding what is in P’s best interests. These are:

• Whether P is likely to have capacity in relation to the matter in question in the future and, if so, when is that likely to be;
• The need to permit and encourage P to participate, or to improve his or her ability to participate in the decision-making process;
• P’s past and present wishes and feelings (and, in particular, any written statement P made when he or she had capacity), the belief and values that would be likely to influence P’s decision, and any other factors P would consider were they able to do so; and
• If it is not practicable and appropriate to consult P, the views of others, such as family members, carers and anyone else who has an interest in P’s welfare.

Choice of deputy

Anyone can apply to the COP for the appointment of themselves, another individual or a trust corporation (in the case of property and affairs only) as a deputy so long as the proposed deputy:

• is over 18 years of age; and
• has consented to his or her appointment.

The role of a deputy is an onerous one which should not be undertaken lightly as it carries with it a great deal of responsibility. In applying to become a deputy, a prospective deputy will need to complete, inter alia, a Court of Protection Form COP4 which sets out no fewer than 17 personal undertakings which the deputy is required to give.

As individuals lacking capacity have no role in choosing their deputy, the role of the COP in assessing deputyship applications is an important one.

As a general rule, the COP will not be keen to appoint a deputy:

• whose interests conflict with those of P – in practice, this may be hard to avoid as family financial affairs are often intertwined;
• who is resident outside England and Wales;

However, applications will be considered on a case-by-case basis and, on occasion, the COP has been willing to appoint deputies who, for example, are not resident in England and Wales.

In the decision of Re BM, JB, v AG ([2014]EWCOPB20) Senior Judge Lush noted that although the relationship of a proposed deputy to P provides no automatic entitlement on the part of any category of person to be appointed and the COP retains discretion in this regard, the Court has traditionally preferred to appoint a relative or friend as a deputy if it is satisfied that it is in P’s best interests to do so) because a relative or friend is more likely to be familiar with P’s wishes and feelings. They may also be better placed to consult with P.

However, Senior Judge Lush went on to note that the Court would not contemplate appointing a particular family member or friend where:

“(a) the proposed deputy has physically, psychologically, financially or emotionally abused P;

(b) there is a need to investigate dealings with P’s assets prior to the matter being brought to the Court’s attention, and the proposed deputy’s conduct is the subject of that investigation;

(c) there is a real conflict of interests;

(d) the proposed deputy has an unsatisfactory track record in managing his or her own financial affairs; and

(e) there is ongoing friction between various family members, which is likely to interfere with the proper administration of P’s affairs.”

The Court generally prefers to appoint an independent, professional deputy, rather than a family member, in cases where P has been awarded compensation for personal injury or clinical negligence.

Status of a property and affairs deputy

It is important to note that a deputy is a fiduciary and has a duty to act in P’s best interests by observing the principles set out above.

The Office of the Public Guardian (OPG), which, together with the COP, has supervision in relation to the affairs of people lacking mental capacity, has produced guidance in which the OPG advises deputies to bear the following in mind in working out what is in P’s best interests:

• P’s past and present wishes;
• P’s beliefs and values;
• P’s views of family members, parents and carers;
• whether P might regain mental capacity and, if so, whether any decision can be delayed until then.

A deputy needs to be aware that a person may have mental capacity some but not all of the time and to make some decisions but not others and should do their best to involve P in decision making if possible.

Although the MCA states that the scope of a deputy’s authority should be as limited as possible, in practice most deputyship orders provide general authority for the deputy to act in relation to P’s property and affairs.

The general rule is that a deputy cannot delegate his powers although the COP recognises that it is not practical for the deputy to carry out each and every task on behalf of P, no matter how administrative. This means that although a deputy cannot delegate any substantive decision regarding P’s property and affairs, he can delegate the implementation of such decision (e.g. payment of bills on P’s behalf). Clearly, whether or not a specific task is capable of being delegated will involve a certain degree of judgment.

P’s finances

A deputy does not have authority to do whatever he or she likes with P’s funds and is constrained by both their fiduciary relation with P and his or her obligation to act in the best interests of P.

In order to minimise the risk to P’s property, should the deputy fail to perform his or her duties, property and affairs deputies have to pay a security bond before the COP will send out the order appointing them, without which the deputy will have no authority to act. The purpose of this bond is to protect the assets of P should the deputy fail to perform their duties. The level of the bond will be based on various factors such as the size and complexity of P’s estate. The bond can be paid for out of P’s assets but a deputy will have no authority to act until the bond is in place. The COP recommends certain approved loan companies from whom the bond can be obtained.

Sadly, despite these protections, vulnerable elderly people lacking mental capacity have in the past been victims of financial abuse by individuals who have been handed roles of responsibility such as deputies. In a press item from Age Concern in 2013, a leading insurance firm said that “the number of claims received relating to such bonds [Deputyship Bonds] has already exceeded last year’s number”. However, since then, the OPG has engaged in a fundamental review and report to Parliament and has implemented a system of more frequent contact with and reporting by all deputies, regardless of the value of P’s assets. This should help to reduce financial abuse by deputies.

Separation of P’s finances

Deputies should keep P’s money and property separate from their own or anyone else’s. A deputy should also keep accounts of those financial dealings made on P’s behalf including receipts, bank statements, invoice and correspondence where necessary.

Investing on P’s behalf

Deputies must take proper steps to equip themselves with the expertise they need to discharge their investment powers and duties, especially where the deputy is a professional.

Deputies should obtain proper investment advice about the way in which they should exercise their power to invest or review investments. Generally speaking, deputies should ensure that any investment products or services they purchase on P’s behalf are provided by individuals or firms regulated by the Financial Conduct Authority, not least because this means that the investments will be covered by the Financial Services Compensation Scheme.

Annual report

All property and affairs deputies are now required to submit a report to the OPG at the end of every year of their deputyship. This is used by the OPG to check that P’s funds are being used in their best interests. The report should include:

• Significant financial decisions made on behalf of P;
• How (if possible) P was involved in decision making;
• Details of all the money P has received during the year;
• Payments made on P’s behalf; and
• The current value of P’s assets and investments.

Reports are currently retrospective but may soon include provision for deputies to report any major decisions which they anticipate making in the coming year.

Court authority required to take certain actions

It will be necessary for a deputy to apply for authority from the COP to take certain steps. In particular, a property and affairs deputyship order usually only permits the making of very limited gifts by the deputy.

Professional charges

A deputy is permitted to employ professionals to help manage P’s affairs and a professional deputy is permitted to charge for his or her time.

Concerns were raised by some MPs about the charges being made by professional deputies and this was one of the reasons why the fundamental review took place. Last year, it was announced that all deputies will be required to provide estimates of costs in relation to general management work. This is not a cap but the OPG will consider whether such charges are proportionate to the size of the estate. If not they will engage in dialogue with the deputy before the costs are incurred. The estimate is to be submitted with the annual report and also have to accompany any bill submitted for detailed assessment.

When does a deputyship end?

A deputyship will end when one of the following occurs:

• P regains mental capacity – a deputy has standing only when P lacks mental capacity
• When P dies
• When the Deputy dies
• If a deputy is removed by the COP.