Protecting vulnerable people from financial abuse: the digitisation of LPAs

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New proposals which would make the lasting power of attorney (LPA) registration process completely digital could put thousands of elderly people at risk of financial abuse. Elizabeth Young, partner and head of private client at Roythornes Solicitors, discusses the impact this change in legislation could bring on many vulnerable people in the UK.

With the continuing rise of dementia patients in the UK, forward planning for lack of capacity has become as important as planning for the event of death. As such, there has been a steady rise in applications for a lasting power of attorney, with as much as an 18 per cent increase in applications during the first half of 2017 compared to the first half of 2016.

An LPA is a legal document which enables someone else to make important decisions on an individual’s behalf if - at some stage in the future - they are unable to do so for themselves. There are two types of LPA: one which relates to health and welfare matters and one which deals with property and financial affairs.

Between 1 April 2013 and 31 March 2017, the application process for LPAs became more efficient but cost savings made by the Office of the Public Guardian (OPG) were not passed on to consumers in the form of lower fees, meaning – according to an Freedom of Information request – approximately 1.8 million people are now entitled to a partial refund.

Further to this, the Financial Conduct Authority (FCA) has also announced plans which would dispense with the need for a pen and paper signature on LPA forms, allowing the whole application to be made online.

Although as lawyers we appreciate the need to move with the times and adapt our systems and processes for the digital age, we believe this particular proposal could see many older people being taken advantage of.

An LPA is designed to provide reassurance, allowing people to put their affairs into the hands of someone they know and trust and make it easier for their families to look after their elderly relatives or friends should they become mentally or physically incapable. Usually the person or people who take on the attorney role are family members – often sons or daughters who, one would hope, are absolutely trustworthy and have the donor’s best interests at heart.

Applications to the OPG, which administers the LPA scheme, must be made while the subject of an LPA - the “donor” - is of sound mind and fully aware of what registering an attorney means. For transparency, the paper application process currently calls for a signature in ink, a witness and somebody to attest that the donor is fully compos mentis. 

According to the FCA, though, almost a fifth of applications received by the Office of the Public Guardian contain errors. These mistakes, it says, lead to delays in LPA being granted, so making the process fully digital would simplify what is a complex, onerous and time-consuming task. It also claims that the new system retains all the safeguards currently in place when creating and registering an LPA.

Like many lawyers who act in this area, however, I am not convinced by the FCA’s assurances and fear many older people will be left vulnerable by these proposed changes.

LPAs are powerful instruments and in the wrong hands they have the potential to cause untold misery and hardship; leaving donors penniless and devastating families.

Sadly, even under the existing “offline” system, people still fall victim to unscrupulous practices. If in future the application process can be done wholly with the click of a mouse, then this worrying situation will only worsen. 

We have all heard of sickening cases where older people who, no longer able to manage their own affairs, have had their bank accounts drained and their homes sold from under them. Oftentimes, other family members are unaware of what is going on until it is too late, and they can have a difficult time proving that attorneys have abused their powers.

According to recent media reports, there was a 20 per cent increase last year in the number of probes into abuses of attorneyships with just over 1,000 people investigated for financial wrongdoing. Additionally, in as many as 90 per cent of cases, the abusers were found to be family members - of whom nearly 70 per cent were the victims’ sons or daughters. 

This is very sad and extremely concerning – especially at a time when our elderly population is set to grow. It also throws into sharp focus the importance of LPA safeguards. It is vital that we find a safe way of letting people create and register for LPAs simply and easily, without compromising security and putting our old people at risk

Tags: Dementia Lasting power of attorney Office of the Public Guardian LPA

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