In 2007, the Mental Capacity Act 2005 introduced Lasting Powers of Attorney (LPAs), which replaced the old Enduring Powers of Attorney (EPAs). EPAs only allowed decisions to be made by an attorney on financial matters and to make decisions once a donor had completely lost mental capacity.
Changes to Enduring Powers of Attorney
LPAs modernised EPAs by extending the decisions that could be made by attorneys to include decisions relating to their health and welfare. We have found our clients often have more impassioned views on their health and welfare than their financial affairs. They also find comfort in their friends and family members being able to act as an advocate for them in relation to decisions concerning their health.
LPAs also changed the point at which attorneys could make financial decisions. Rather than having to wait until a donor has lost mental capacity, a financial power of attorney can be used at the point of registration. This means that if a donor requires some help with complex financial matters, an attorney can assist. It is also a great way to ask someone else to sit on hold with a utility company for 40 minutes on your behalf!
Increase in Number of Lasting Powers of Attorney
The above represents the first modernisation concerning powers of attorney. However, what about going digital? Since they were first introduced, the number of LPAs registered has more than doubled. We find that most clients who want to put a will in place would also like lasting powers of attorney.
The Current System
At present, LPAs require wet ink signatures of the donor, witnesses, a certificate provider and attorneys all on a paper form. This can be quite cumbersome, especially if attorneys do not live near the donor. The form is then submitted to the Office of the Public Guardian for registration. At the moment, the Office of the Public Guardian can take 4-5 months to register an LPA. This can cause problems with LPAs that are required urgently.
The purpose of requiring wet signatures and having a paper-based system was to try to add an additional level of protection for donors who may fall victim to individuals fraudulently making LPAs to access a donor’s accounts. Age UK published analysis from the National Crime Survey showing elderly people were victims of fraud every 40 seconds. As elderly people are often those using powers of attorney it is vital that any change to LPAs protects vulnerable people. Therefore, any further modernisation of LPAs must balance the need to streamline the current system whilst also protecting the donor.
The New Bill
A bill was recently proposed to parliament which would change a number of aspects of the current LPA process. It has now been passed to the House of Lords for approval. If this bill is approved the biggest changes will be as follows:
LPAs could be registered digitally, removing the need for a complete a paper process;
An electronic version of the LPA can be used as evidence to third parties that the attorneys are appointed; and
Identity checks are going to be required for individuals who are listed on a power of attorney.
In the initial proposal, it was suggested that LPAs should be fully digital. However, this would mean that an LPA would no longer be a deed. Therefore, all of the parties to the LPA could sign the documents via e-signature and these would not need to be witnessed. The thought process behind this potential reform was that it would streamline the system. Following a consultation with the public and legal practitioners, it was decided that there was too much risk to the donor. This is because it would have made it very easy for a fraudulent party to put an LPA in place without ever consulting a donor and leave the system open to much more abuse
The refined digital system proposed by the bill would allow digital registration (but not with digital signatures, these would remain ‘wet’ and witnesses would still be required) and hopefully in doing so reduce the registration time.
Once an LPA needs to be used, it must be registered with third parties. If it is a financial LPA, attorneys will register the LPA with all institutions where the donor holds money. The health and welfare LPA needs to be listed on a donor’s medical record. GPs and care homes will also require copies. At the moment, the attorneys must take the original with them to these institutions or obtain a certified copy from a solicitor. This process can be quite tiresome for friends and family that are already dealing with a loved one losing capacity. Electronic copies being acceptable is a welcome improvement.
Whilst full digitisation would have been a step back in donor safeguarding, the proposed digital registration may improve Office of the Public Guardian turnaround times. The introduction of identity checks should provide further protections for donors. At the moment, there are no requirements for donors or attorneys to prove who they are before an LPA is registered. However, if they complete their lasting power of attorney with a professional, the latter should be collecting identity documents as part of their compliance procedures. The new system will require the identity of all individuals involved in an LPA to be verified before registration of the LPA is allowed to occur. This will be a big step forward for safeguarding.
Practitioner predictions for the future
Without access to a crystal ball, it is difficult to predict how the new reforms will affect LPAs. As a practitioner, the introduction of identity checks is a welcome relief for safeguarding generally but will likely increase costs for donors instructing solicitors to put these in place as practitioners will now have to review identity documentation for all parties. That being said, some of these costs may be set off against a more steam-lined digital registration service.
If you would like to put in place lasting powers of attorney, please contact Emily Robertson email@example.com or telephone 020 3880 9966.