Deputies and attorneys: be clear on your “Duties of investment”
Being appointed as an attorney or deputy for an incapacitated person is a significant responsibility. The role holder takes control of someone’s life savings and investments making decisions on where, when and how they are managed and invested. It can be a daunting prospect so the advice is simple: deputies and attorneys – be clear on your duties of investment.
Ann-Marie Aston is a partner and the Court of Protection (COP) Lead at the Wilkes Partnership. She specialises in acting on behalf of incapacitated clients and is aware that some deputies or attorneys will sign a Lasting Power of Attorney (LPA) without being fully aware of what is expected of them.
Mental Capacity Act 2005 (MCA)
She says “Prior to the MCA, the COP would appoint a receiver to manage an incapacitated person’s finances but they were given limited authority on investments. Receivers were ordered to pay funds to the Court Funds Office but that was at a time when the court’s special account was paying an interest of 6%. Such a return at zero risk would be the stuff of dreams for today’s deputies!”
The MCA changed how receivers, now deputies, and registered attorneys should approach decision-making, including in relation to investments. Ann-Marie continues “The MCA focuses on the protected person’s ‘best interests’, referring to the statutory principles set out in Section1. It is, truly, a fiduciary duty”.
The MCA Code of Practice was also issued to help with decision-making but it offered only limited guidance on investments:
- They should be held in the name of the incapacitated person
- Decision-making duties should not be delegated
- The deputy or attorney should not ‘take advantage’ of the position.
The Public Guardian (PG) supervises deputies and can investigate attorneys under a registered LPA. The case of Re Buckley in 2013 shows how rigorously it applies the ‘best interests’ rule.
Ann-Marie explains “In 2010 Miss Buckley made a property and financial affairs LPA appointing her niece as sole attorney. The PG began its investigation when concerns were raised by Miss Buckley’s care home. It found that £133,000 had been invested or misappropriated without the knowledge or consent of her aunt”.
The COP immediately removed the attorney and appointed a deputy. It directed that the “standard investment criteria” provided by the Trustee Act 2000, which applied to trustees and other fiduciaries, should apply to deputies and attorneys when considering investments. The criteria also addresses the issues of the suitability of investments and the need for diversification.
In May 2019 the PG issued “Investing for someone as their attorney or deputy”. It is recommended reading for anyone appointed as a deputy or attorney as it highlights the obligations they are under when investing funds on behalf of an incapacitated person.
Finally, Ann-Marie said “Deputies and attorneys: be clear on your duties of investment. If you are unsure of your obligations in anyway, you should seek proper legal and financial advice”.