Ten years after Gordon Brown introduced new controls to crack down on fraud, gaping holes in Britain’s power of attorney system are still leaving vulnerable people at risk – including from their own families.
Granting power of attorney gives a nominated person, the attorney, control over your financial and healthcare affairs if you become mentally incapable.
The old “enduring” power of attorney system was replaced with “lasting” power of attorney in 2007 over fears that the system was too easy to abuse.
But earlier this summer a former Court of Protection judge warned that the potential for abuse could have “devastating” consequences on families, “particularly between siblings”.
Now, in a new foreword to his legal guide on the topic, the ex-judge, Denzil Lush, has also hit out at the Government, claiming that the Ministry of Justice had been “disingenuous” in promoting the new system.
After his experience Robert Proctor is inclined to agree. Mr Proctor said he felt “like an idiot” for not stopping his half-brother, Seth, stealing £125,000 from their parents.
Lee and John Proctor (now aged 98 and 88) thought they were doing the right thing when they asked their sons Robert and Seth to set up a power of attorney agreement in the event they became unable to look after their own affairs.
‘I was an idiot to think he wasn’t a criminal’
As is common in cases where siblings or multiple people act as attorneys, the arrangement was set up on a “joint and several” basis.
This means that any one of the attorneys can make a decision without the need to approve it with anyone else. If the attorneys are appointed “jointly”, they must all agree before an action is taken.
It is, for instance, possible to instruct solicitors to appoint attorneys jointly for property matters, but jointly and severally for health and welfare questions.
My step-mother has been badly hurt – she wonders how she could have trusted him
The Proctors’ decision to appoint their sons on joint and several terms “was a mistake”, said Robert. The half-brothers, now in their 50s, didn’t know about each other’s existence until their teens.
John is father to both but Lee is mother to Seth only. When the power of attorney was triggered, in 2010, it was agreed that Seth, who lived in Broadstairs, Kent, and nearer the couple’s care home, would handle their affairs. Robert, an IT analyst, lives an hour-and-a-half’s drive away, near Sevenoaks.
“Initially we were both involved but Lee thought it made more sense for Seth to be most involved because he lived nearby. I took a step back at that point and he arranged for their house to be sold,” said Robert.
The care home raised the alarm when bills went unpaid and the police were notified. Seth, 54, pleaded guilty to stealing £125,000 from Lee and John between May 2013 and March 2015. He was sentenced to 20 months in prison, suspended for two years, and 200 hours of unpaid work.
“My stepmother has been badly hurt. She wonders how she could have trusted him and I was an idiot to think he wasn’t a criminal,” said Robert, who is now his parents’ sole attorney.
He said the couple now spent about 90pc of their pension income on care fees and had been left with no assets to pass on.
Despite rising incidence of abuse, the number of registered powers of attorney continues to rise. In the first half of this year there were 322,573 registrations, a rise of 18pc on the previous year.
However, 172 attorneys and “deputies”, court-appointed attorneys, were struck off by the Office of the Public Guardian in 2015 because of financial mismanagement or theft. That represents a rise of 153pc in just two years.
Can I appoint someone independent?
Mr Lush, who has presided over thousands of cases, said “almost 90pc” of abusers were “friends and family”. He said: “[Of those] I think about 68pc were either a son or daughter who had created the power of attorney.”
Any adult can be an attorney, excluding bankrupts and those subject to “debt relief orders”. If there is a risk of family or friends disagreeing, an independent person can be appointed.
Usually this would be a solicitor but costs could be high, said a spokesman for Step, a trade body for estate planning specialists.
It costs £82 to register a power of attorney with the Office of the Public Guardian. As there are two types of arrangement – one covering property and finance, the other health and welfare – the cost can reach £328 per couple.
If you use a solicitor, costs can vary dramatically. Depending on their expertise and where they are based it can cost anywhere between £150 and £1,000 to set up the powers. If a solicitor, or other professional, is appointed as attorney they will charge expenses to cover costs related to the role, such as phone calls, postage and travel.
In addition they will charge for their time in a professional capacity. For a solicitor this typically starts at around £250 an hour, so negotiating fees upfront is crucial.
Rachel Griffin, a power of attorney specialist at Old Mutual Wealth, the pensions company, said that while safeguards brought in with the introduction of lasting power of attorneys were an improvement, a government review was needed.
She suggested that the courts could offer higher levels of protection, such as regular audits of attorneys, but that this would incur steep costs that would make them feasible only for those with large estates.
“No matter what checks and balances you have, if someone really wants to commit fraud or theft they will find a way,” Ms Griffin said.