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Court of Protection investment restrictions for attorneys

View profile for Mike Pemberton
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In a recent Court of Protection case, Re Buckley, restrictions were imposed on an attorney’s ability to invest a donor’s funds.

The case involved a Lasting Power of Attorney (LPA) which was granted by Miss Buckley, 81, to her niece to be her sole attorney.

Miss Buckley’s niece withdrew £72,000 of her funds in order to set up a reptile-breeding business. This was a risky venture, without any formal security or share of the investment returns for Miss Buckley.

The Office of the Public Guardian supervises attorneys to manage the property and finances of others, and investigates complaints or concerns relating to mismanagement of a donor’s finances, including initiating court proceedings when necessary.

Subsections (3) and (4) of section 22 of the Mental Capacity Act 2005 provide that the court may revoke an LPA if:

(1) it is satisfied that the attorney has behaved or is behaving in a way that contravenes his or her authority or is not in the donor’s best interests, or is proposing to behave in such a way; and
(2) the donor lacks capacity to revoke the LPA.

The Public Guardian applied to the Court of Protection in this case to revoke the LPA on Miss Buckley’s behalf and therefore the niece’s appointment as her attorney. The application was successful.

Senior Judge Denzil Lush said: “There are two common misconceptions when it comes to investments. The first is that attorneys acting under an LPA can do whatever they like with the donors’ funds. And the second is that attorneys can do whatever the donors could - or would - have done personally, if they had the capacity to manage their property and financial affairs.”

He went on to say: “Managing your own money is one thing. Managing someone else’s money is an entirely different matter”.

The Mental Capacity Act 2005, section 1(5), states that: “an act done, or decision
made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests.”. 

The niece admitted that some of the money was used for her own benefit and the investment was made in her own name. 

The Court was of the view that the fact that the niece thought that Miss Buckley would have made the investment herself had she had the requisite capacity to do so was irrelevant. The sole test is whether the attorney has acted in the donor’s best interests.

The Court held that the investment decision was not in Miss Buckley’s best interests, and revoked the LPA.

It is clear from the judgment that the ability to invest the funds of an elderly donor with a short life expectancy is significantly limited;

“Two of the most important factors when considering the suitability of investments are the donor’s age and life expectancy.”

Where a donor has a life expectancy of five years or less, short term investments are more appropriate.

The case also highlights the supervision given to LPAs by the Court of Protection. Attorneys need to be aware of the law regarding their role and responsibilities and take significant care and sound financial advice prior to making investment decisions.

By Sophie Maloney, Civil Liberties Unit

For advice on Court of Protection issues contact our specialists on 01616 966 229 or you can complete an online enquiry form.