Fraudulent LPAs are now a thing

[Arborbridge]

This is where the Lasting Power of Attorney offers less security than the old Enduring Power of Attorney.

There was no need to notify anyone that you had made an EPA, and it could be used immediately. However, if the donor lost their mental capacity it did have to be registered at the OPG, and it couldn't be used until registration had taken place. And importantly the registration process did require that various relatives were notified and given a chance to object.

However, an LPA has to be registered before you can use it at all, irrespective of your mental state, so 99% of people register them immediately.

The problem is that although the LPA form does give the option for people to be notified of the application for registration that's all it is - an option. And as 99% of people making an LPA are registering it at the same time as they're making it, when they are, by definition, of full mental capacity, they quite understandably don't see any need for anyone to be notified, so they reject the option.

The ease of fraud is something that's always worried me, and another aspect that often surprises lay people is that no evidence at all is required that the person making the LPA actually has mental capacity to do so. It would therefore be the easiest thing in the world to make an LPA for someone who did not have mental capacity, to get it registered, and to use it to steal the donor's assets.

And from the criminal's point of view the best aspect of LPA fraud is that the unfortunate victim is often by definition incapable of giving evidence, thereby making prosecution extremely difficult or impossible. This not only simplifies the crime but removes a lot of the risk from it.

At the risk of being accused of special pleading a relatively simple way of policing the system would be a requirement for a certificate from a solicitor that all the necessary formalities had been complied with and that the identity of the parties to the LPA had been verified. But this would obviously (a) create an additional cost; and (b) put money in lawyers' pockets, and as the Government are obsessed with `light touch regulation' and know how unpopular lawyers are this would never happen for purely political reasons.

Having said all of the above it would be far easier just to use an ordinary Power of Attorney - a section 10 PoA as they're known in the trade. This is a simple one page form that is signed by the donor in front of a random witness, and gives the attorney immediate and unrestricted powers to deal with all the donor's property with absolutely no overview at all and no pesky notification / registration formalities to worry about.

I suspect the only reason these aren't used to perpetrate widespread fraud is that crims simply don't know about them - so I sincerely hope the LF readership doesn't include any potential fraudsters!

Would a way to defeat this be to set up either type of power of attorney immediately, that is ahead of any possible fraud attempt? If a genuine document is already registered, would that defeat/deter any later fraud?

Arb.

[GoSeigen]

At the moment the Office of the Public Guardian don't even bother to answer emails about LPAs so I don't see that anyone has much input into what they do. Have they been emasculated by austerity cuts or what?

GS

[Arborbridge]

At the moment the Office of the Public Guardian don't even bother to answer emails about LPAs so I don't see that anyone has much input into what they do. Have they been emasculated by austerity cuts or what?

GS

Have they been emasculated by austerity cuts or what?

Probably. Successive governments for most of my adult life have been super sensitive about raising taxes, and hold on to this erroneous belief that one can cut back and increase efficiency, thereby keeping the quality constant. I hasn't happened, it cannot happen: it is one of those illusions politicians love. By bashing the other side's record on "efficiency" it makes them feel good, but the voter picks up the resulting lack of service.

These days, we might call it "shinkflation" - the same price for a smaller Mars bar.

Cutting out checks and balances by qualified people is an easy way to cut costs without it being immediately obvious. But you never get something for nothing: someone has to pay the price.

Arb.

[forgotusername]

Regarding the office of the Public Guardian, some years ago I found them sadly lacking in the matter of the abuse of someone who had created an EPA. An elderly relative had been befriended by a neighbour who subsequently declared him mentally incapable and began to systematically take over his assets. This included cashing in ISA's and buying an insurance policy which paid them a monthly income, something hardly in the interests of my relative. When I found out, I tried to alert the Office of the Public Guardian whose web site asked people to report such abuse. They did nothing and showed no interest.

Thankfully my relative had taken it upon themselves to go to his doctor to get certified as mentally capable when he began to suspect the neighbour's intentions and proudly told me that he had answered all 40 questions correctly. It took months to legally rescind the old EPA and to recover the assets that had not disappeared, even requiring a solicitor to write demanding the return of private papers.This allowed me to set up an ordinary PoA which made it possible for me to restore control over bank accounts and to reclaim money invested in the insurance policy.

Without my efforts my relative would have simply been a source of funds for the neighbour until he died when the Will he had been induced to write would have handed over everything. The Office of the Public Guardian were as useful as a chocolate teapot. I don't know if they have improved but I hope I never need to rely on their vigilance again.

[Howard]

Moderator Message:
Can we restrain ourselves and not go too far off-topic in discussion of where a film might be available please! Thanks (chas49)

Have you seen the film? It's pretty relevant to the OP and the LPA discussion. It deals with the subject of the American equivalent of LPAs and their possible mis-use.

regards

Howard

[Clitheroekid]

Moderator Message:
Can we restrain ourselves and not go too far off-topic in discussion of where a film might be available please! Thanks (chas49)

Have you seen the film? It's pretty relevant to the OP and the LPA discussion. It deals with the subject of the American equivalent of LPAs and their possible mis-use.

regards

Howard

It was thanks to this thread that I heard about and watched the film. Although it was a (very good) comedy it raised an extremely valid point, namely that there is a coterie of professional guardians (or Deputies as they're called in this country) who are very little known about and operate almost entirely out of public view, but who make a very lucrative living from administering the estates of people who lack mental capacity.

I'd always been vaguely aware of this, but in October 2020 I read a law report that really opened my eyes to the scale of fees that were being charged by the solicitors involved. I was frankly outraged, and I sent the following email to the Ministry of Justice. Perhaps needless to say I never received a reply:

I was shocked to see the bills run up by professional Deputies in the recent case of PLK & Ors (Court of Protection : Costs) [2020] EWHC B28 (Costs) - https://www.bailii.org/ew/cases/EWHC/Co ... 0/B28.html.

All four Deputies were solicitors, and one of them charged £124,000 for a single year's work. The other bills for a year's work were respectively £29,000, £41,000 and £50,000.

As a practising solicitor I have acted for a number of Deputies, so I know that nearly all of this work is just routine. In fact the vast majority of Deputies are lay people who are paid nothing at all, but manage perfectly well.

It is quite outrageous, therefore, that such simple routine work is carried out by solicitors charging hundreds of pounds an hour. These charges have to be paid out of the patient’s estate, and such pillaging of a mentally ill person's property is deeply immoral.

Although the work is important, and needs to be carried out to a high standard, it does not at all need to be carried out by a highly qualified (and highly expensive) solicitor. There are plenty of intelligent and educated people who would be perfectly capable of doing this work at a tenth of the cost of a solicitor. The MoJ should therefore look at training people to do this as a full time job. For a modest salary of £40k or so one person could probably manage a dozen patients' estates, saving hundreds of thousands of pounds annually.

The current system is complacency at its worst. The only reason it's not become a public scandal is that the poor patients are, by definition, completely ignorant of the fact that their estates are being plundered. And their Deputies - the very people supposed to be acting in their best interests - are hardly going to raise a complaint on their behalf when they are the ones doing the plundering!

If people with mental capacity were being systematically exploited like this it would be on the front page of the Daily Mail, but the closed nature of this unknown community of professional Deputies and their unfortunate patients means that it can all be hidden from the public gaze very effectively.

I'm not saying that the charges as allowed by the system are excessive - as the law report makes clear, they are only set at a level that the law allows to be charged, so the various solicitors are acting entirely lawfully. But it's both ridiculous and scandalous that what is mostly just simple administration work should be carried out by private firms of solicitors at all. Their level of skill (and their associated level of expense) is not remotely necessary or justified. It's like having your Ford Fiesta maintained by a Ferrari workshop.

On the rare occasions that the work actually needs input from a practising solicitor it should be purchased as a one off item.

But as I said in my email, there's nobody to speak up for the patients and defend their interests. The deputies who are appointed to represent their interests are hardly going to complain that their own charges are too high - indeed, the whole point of the case reported is that they wanted (and were allowed) to increase their hourly rates.

The new guideline rates are set out at paragraph 35 of the judgment, and it can be seen that in Central London a senior solicitor deputy is allowed to charge at nearly £500 per hour. All the figures are subject to VAT, which, by definition, the patients can never recover, so in practice this would work out at £600 per hour - £10 a minute!

Even the absolute bottom rate - a Grade D fee-earner (i.e. someone completely unqualified) in a rural backwater - would be allowed to charge £160 per hour, which would have a very significant impact on a patient with a modest estate.

It's a system that is quite blatantly not fit for purpose, but because of the factors mentioned and the small number of people affected it has generally managed to avoid any real public scrutiny. The reference to the film was therefore a very useful reminder that I'd never received a reply, so I'm now sending a copy of my email to my MP, in the hope that this time it might actually elicit a response. I'll post the response if and when it arrives.

[CliffEdge]

I wonder why Which? Have never raised this issue?