Insufficient safeguards on lasting power of attorney (LPA) agreements are leaving elderly and vulnerable people open to abuse, according to a retired senior judge.
Denzil Lush, who retired from the Court of Protection last year, has written a book on what is considered to be the definitive guide to the area of law, which seeks to protect individuals that are not able to look after themselves.
In the foreword to the book, he claims that the Ministry of Justice has been “disingenuous” in promoting LPAs and says that “a lack of transparency causes suspicions and concerns which tend to rise in a crescendo and eventually explode”.
In the last year, there were 650,000 applications to register lasting power of attorneys and there is a total of 2.5 million currently registered. The legal documents allow individuals to hand over the responsibility for managing their finances or making decisions about their health and wellbeing to trusted family members or friends in the event that they are no longer able to do so themselves.
Yet Mr Lush has reportedly said he would never sign one himself and that they can have a “devastating” effect on families.
‘There are positives and potential negative to setting up LPAs’
Although overall there is no official measure of financial abuse against the elderly there is plenty of anecdotal evidence.
The charity, Action Against Elder Abuse, says that in one year alone its helpline received reports of theft from elderly people that totalled £42 million. In the majority of cases the money had been taken by family members who felt they were entitled to ‘take their inheritance early’.
Stephen McCarthy, director of Action Against Elder Abuse England, says: “We regularly hear from family members of older people who have only recently heard of abuses by their attorneys, often when it is too late to effectively do anything about it. At the very least, the public deserves to be furnished with information relating to both the positives and potential negatives of setting up a power of attorney. It is simply incorrect to suggest that the process is not open to abuse."
He adds: "There can be few people better qualified than Mr Lush to comment on the shortcomings of the current power of attorney process. While it is understandable that the Ministry of Justice is keen to ensure that provision is made to support people when mental capacity becomes limited, power of attorney is wrongly presented as a risk-free solution.”
‘An LPA is about nominating someone you trust’
However, financial services firms that encourage older people to register an LPA as part of the retirement and estate planning process say these reports should not put them off.
Dean Mirfin, technical director at Key Retirement says: “A power of attorney is about nominating those you trust. To suggest that abuse is symptomatic of the system is clearly not evidenced and it is unfortunate that this isn’t balanced with the heartache and horrendous issues faced in many cases by those who do not have LPA’s in place when things go wrong.
“What I think is very important is that choice of attorney is paramount and that appointing “carers” and those who we believe to be “friends” to take care of our finances and health and welfare are questionable against either a professional attorney or our children. Someone being a friend does not mean that they can be trusted with our money.”
Rachael Griffin, personal financial planning expert at Old Mutual Wealth, adds that there are steps individuals could take to reduce the opportunity for abuse. “People able to appoint more than one person to act on their behalf, where both signatures are required, which could provide greater peace of mind.”
She continues: “With the continual rise in dementia, there is a very real risk that people will be left in a vulnerable position if they don’t register a LPA. Those with dementia are particularly vulnerable to the theft or illegal use of their property, money or other valuables. A LPA can only be registered while you have mental capacity – once you’ve lost capacity it is too late.”
However, while she supports the use of LPAs she does say that the system could still benefit from a review. “The concerns raised by Denzil Lush regarding the safeguards in place should act as a prompt for the Ministry of Justice to review the protections in place and perhaps a protector type role should be extended across all LPAs in place.”