Protecting & passing on wealth

Publish date

22 March 2022

What are the recent changes regarding discretionary investment management and Lasting Powers of Attorney?

The Office of the Public Guardian (OPG) has confirmed that they will change their guidance regarding financial Lasting Powers of Attorney (LPAs), so that attorneys can delegate investment decisions to a discretionary manager without an express provision in the LPA or a court order.

Since 2015 the OPG’s guidance has stipulated that attorneys under a financial LPA are unable to invest via a discretionary management fund unless the LPA includes an express provision. Discretionary management allows investment decisions, such as buying and selling shares, to be made by regulated professionals without prior authorisation.  This enables investment managers to take advantage of a good investment opportunity and to buy and sell investments quickly to prevent risk of loss.

What issues are there if there was no express provision?

The problem is that prior to 2015, many financial LPAs and Enduring Powers of Attorney didn’t contain this express provision. If the donor (the person making the LPA) still had capacity, they could revoke their existing LPA or Enduring Power of Attorney and make a new LPA including the provision.  However, where the donor had lost capacity to make a new LPA, the attorney would have to apply to the Court of Protection to obtain retrospective authority. This was not a practical option, as a court application is a lengthy and expensive process. The delay could cause loss to the donor’s investments.

What does this change mean for the future?

The Law Society of England and Wales and The Society of Trust and Estate Practitioners (STEP) have both welcomed the news that the OPG’s view has changed.

Whilst it is not yet clear when the OPG will update their written guidance, we understand that in the interim period this verbal confirmation will be sufficient for an attorney needing to instruct a discretionary investment manager.

If you have any questions about this topic, please get in touch

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