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Preventing elderly financial abuse

Date:14 DEC 2017
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The article was originally published in New Law Journal, the leading weekly legal magazine.

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There shouldn’t be anything suspicious about a young man accompanying his aunt to see her solicitor. Frail or elderly people often seek the assistance of family members when making important decisions. Most of the time, there is indeed no concern, just a caring relative looking after a loved one. But there is a growing sense among private client practitioners that financial elderly abuse is on the rise, and an overly protective nephew could be a sign that the situation is perhaps not as straightforward as it seems.

Elderly financial abuse is a crime that takes place behind closed doors. It can be difficult to spot and there is no official data on how prevalent it is, but concerns have been rising, in particular in relation to lasting powers of attorney (LPAs). Introduced in 2005 to replace enduring powers of attorney, LPAs initially had to include a provision for the notification of a third party – usually it was a family member – when activated. This requirement was scrapped when the process was simplified in July 2015 as part of a drive to encourage greater take-up of LPAs. The main safeguard still in place is the requirement that an LPA must be registered with the Office of the Public Guardian (OPG), the Ministry of Justice agency responsible for the protection of individuals who lack mental capacity.

There are otherwise few preventive measures. When approached to advise on LPAs, lawyers usually insist on seeing the donor on their own, if not from the start at least once they’ve had an initial conversation with interested parties. Claire Davis, a partner at Howells and a director of Solicitors for the Elderly (SfE), brings up the case of the nephew who came with his aunt to see her about appointing him as her attorney: 

‘It’s best practice to ensure that you see a client on their own and that there is no influence from a relative, so the nephew was asked to leave the room, so I could independently assess her needs and that she trusted him.'

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Cretney & Lush on Lasting and Enduring Powers of Attorney
Cretney & Lush on Lasting and Enduring Powers of Attorney
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Spotting abuse

Most clients trust their families and would naturally appoint a relative as their attorney. More than 80% of donors do. As a result, spotting abuse can be difficult. Among the tell-tales of possible undue influence, says Chris Keenan, a partner at Humphries Kirk and also a director of Solicitors for the Elderly (SfE), is a client not being allowed to speak for themselves: 

‘The children, for instance, would not let their mother or father put a word in edgeways, saying "Mum wants this" or "Dad wants that", or they jump in to answer your questions. And sometimes you get the feeling that a client’s capacity may be borderline. You pick up controlling behaviour in this way.'

Karon Walton, a partner at Tollers and another SfE director, shares similar concerns, saying abuse is ‘generally very hard to detect, even when you see somebody alone in front of you’. Uncovering it involves being able to pick up on a number of signs such as isolation, who’s around, whether the family appears dysfunctional, are some members excluded? etc: 

‘You do a bit of gentle digging, suggest to the client they should discuss the matter with the family and make sure the family is aware of their wishes. Sometimes it’s just the feeling something isn’t quite right.’

But for Walton, the deterioration of somebody’s mental health is ‘the biggest trigger’ for concern.: 

‘I get calls about powers of attorney on behalf of parents and I have to explain it has to be the person concerned, mum, dad or whoever, who must ask for the advice and instruct me to act for them. Then you start peeling the layers and you find that this person may not have capacity.’

Most of the time, however, abuse only comes to light after the event. Often, it’s only when the donor has died that the estate finds out, with bank statements showing unusual expenses. ‘In one case, the account of a deaf and blind client showed a subscription to Blockbuster and payment for videos and DVDs, which clearly couldn’t have been from him,’ recounts Davis.

Public bodies are another key source of referrals to the OPG. Typically, a local authority undertaking a financial assessment of an elderly person about to go into care makes unexpected findings about their finances that are not in keeping with the expense pattern of a person in their circumstances. Another regular occurrence is an elderly person’s home being sold to pay for care home fees but the fees aren’t being paid. Just as often, a tip off by a concerned family member or by care home staff will set off the referral process.

Care homes, Wedlake Bell partner Ann Stanyer points out, have a duty to report concerns. A recent Freedom of Information Act request by her firm to the Care Quality Commission (CQC), she says, revealed that between January 2013 and June 2017, 12,968 safeguarding reports were made to the CQC about concerns over financial abuse. That’s an average of 50 every week over the period. ‘It may have been just a suspicion, but that in itself is a concern,’ she says. The only other data about abuse is a Northern Irish study published in September 2016, she adds, which suggests that 21% of the elderly population has experienced some form of financial abuse. ‘This is specific to Northern Ireland but it’s a credible indicator of what probably goes on in Britain,’ she says.

By the time the abuse has been discovered, however, it is often too late. Civil remedies and criminal prosecution are both cumbersome and uncertain. ‘If there have been large withdrawals from a bank account, it’s possible to report that to the police, but success is usually limited,’ comments Walton. Providing evidence of the abuse that meets the criminal standard of proof is a major hurdle, she says. One further issue is that the police may agree about the evidence but say it’s not in the public interest to prosecute because the perpetrator is also a vulnerable person. Civil remedies will also be limited if the offender has no assets and has spent the cash they unlawfully withdrew.

DIY risks

The advent of do-it-yourself law has heightened the risk further: relatives who disagree with initial advice provided by lawyers can just go online to download LPAs for their parents to sign with no further checks being undertaken.

At their most basic level, online tools also make it possible to conceal abuse in a way that would not have been possible before. David comments: 

‘There were more everyday safeguards when people collected their pensions from the post office. There was more contact and post office staff could see if somebody was being frogmarched by a carer.’

Online LPA forms, even though they have been simplified, can also feel complex for an elderly person, potentially opening up the risk of abuse further. With the OPG encouraging people to draw up LPAs without legal assistance, the key issue, says Keenan, is one of education. 

‘If you go down this route, you’re opening a serious legal power – authorising somebody to be ‘you’ – but there isn’t enough signposting.’ 

The trouble, Keenan suggests, is that few donors are aware of the significance of their decision, and few attorneys realise the extent of their responsibilities. This sensitive point is one of the major areas where lawyers would like to see the law change.

More safeguards

At present, choosing your attorney carefully is regarded as the best safeguard against possible abuse. But while private client lawyers advise clients to focus on the fact they are potentially giving a third party enormous powers over their affairs, many also say attorneys too should be made more aware of what their role entails.

Keenan suggests it should be made compulsory for attorneys to take advice before being appointed. He accepts there would be a cost element to it but says a one-off fixed-fee interview could be adequate – and it may not need to be with a solicitor.

The obligation on attorneys to keep records, much in the way that deputies appointed by the Court of Protection have to, is another popular suggestion, along with the requirement to have a surety bond in place. ‘That’s what we already advise attorneys to do, but then what the attorney does is, currently, out of our hands,’ says Davis. This could be combined with an obligation to report every year to the OPG.

Stanyer adds that requiring the accounts to be signed off by a chartered accountant would make the operation of LPAs even safer. The cost could come out of the donor’s estate and the OPG’s role could be expanded to carry out regular random checks.

However, whether the OPG, which already supervises about 60,000 court-appointed deputies, would have the resources to take on this additional role in respect of 2m or so attorneys, is the main question. Walton says SfE raised the issue with the OPG at a stakeholder meeting more than a year ago. The Ministry of Justice, she says, responded that this would not be practical: 

‘I understand that there is question of resources, but until there’s some element of accounting, it’ll be difficult to ensure a better level of protection.’

A third key change would be to require that a donor’s mental capacity is assessed by a professional person such as a solicitor, doctor or nurse, as is the case in Scotland. Davis remarks:

‘At present, it could be anybody, and there are no systematic checks. It should really be a person who can be trusted; a professional attorney can at least check what’s been done.’

Such a requirement would likely increase the cost of LPAs but Barbara Rich, a barrister practising from 5 Stone Buildings, suggests this could be dealt with by way of a fixed-fee set by the Ministry of Justice. Rich also says this could be combined with ‘a more stringent structure where both donor and attorney are asked more searching questions. It would encourage all parties to think more carefully’.

Another provision from Scots law that could usefully be introduced in England and Wales would be for LPAs to apply only to specific decisions rather than to all the donor’s affairs.

Additional changes could also include bringing back the old requirement for family members to be notified when the LPA is first activated. Rich says: 

‘The old Enduring Powers of Attorney caused a lot of heartache because notification was strictly based on kinship. For instance, if you had a gay couple where the families just didn’t accept their lifestyle and were estranged, strict kinship would mean notifying the last people they would wish to have notified.’ 

This changed with the introduction of LPAs, which gave donors freedom of choice as to whom they would like to be notified. ‘It was a bit self-defeating because the person notified had no obligation to respond but it could be one way of raising concern if the person notified was known to you,’ Rich notes.

In the meantime, lawyers concerned that abuse may be taking place should not be afraid of picking up the phone to the OPG, Stanyer says: 

‘The OPG will require evidence, not just suspicion, but if there are concerns about X, and then they have a call from somebody else, they will join the dots. We have to be braver at tackling this. If you compare this with the action taken when the government first began to tackle child abuse cases, you can see that much more can be done to protect elderly vulnerable clients. Nobody is speaking up for the elderly. There is no minister for the elderly. The elderly are economically significant and a growing population, but they are increasingly voiceless.’

Low cost & safe

The rise in financial abuse has cast a shadow on LPAs, whose initial purpose was to provide a growing elderly population with a low-cost framework for the management of their affairs in later life. Over-simplification of the process, however, along with alarming accounts of abuse, have led to serious concerns over the safety of that framework. Comments by former head of the Court of Protection, Denzil Lush, over the summer – that he would rather have a court-appointed deputy than draw up an LPA – have done little to restore faith in LPAs.

But for all these concerns, LPAs remains a significantly more affordable and more flexible alternative to deputyships. It’s also one that lets the donor choose who they would like to manage their affairs. In austerity Britain, it’s unlikely that the OPG will be given the resources to take on some of the more radical measures advocated by supporters of law reforms. Other changes, on the other hand, would only involve minor additional costs. Combined with deft legal advice and greater public legal education, the safety of LPAs could be brought to a much more acceptable level.