Powers of Attorney are commonly used where a person (the ‘donor’) wants to appoint one or more others to assist in their decision making or to make decisions on their behalf. They are often utilised where the donor lacks the mental capacity to make decisions themselves, although this is not always the case. The attorney must act in the best interests of the donor and ensure that they are acting for the donor’s benefit, rather than their own, at all times.
Attorneys will often have access to the donor’s bank account and be able to manage the account and make payments on the donor’s behalf. Despite the strict duties that they are under, financial abuse by attorneys, such as using the donor’s funds for their own benefit, is all too common, especially where the donors are elderly or lack mental capacity to make decisions for themselves.
The Lasting Power of Attorney (“LPA”) was introduced in 2007 to replace the previously used Enduring Power of Attorney (“EPA”), and to introduce safeguards with a view to preventing financial abuse such as giving notice to relatives and/or professional certificate providers, and registering the LPA with the Court. EPAs are now only valid if they were entered into before October 2007. It is paramount when appointing an attorney that the donor appoints someone who they consider will be capable of properly managing their affairs, and of course, someone they trust implicitly. Unfortunately, it is not uncommon to see that an attorney has been abusing their position and acting in breach of their duties to the donor, often by effectively stealing the donor’s funds to use for their own financial benefit.
If, as a donor, or simply as an interested party, you have suspicions that an attorney may be abusing their position there are a number of steps that can be taken, and both criminal and civil remedies may well be available.
It is often difficult to collate specific evidence in these circumstances as to what the attorney has done with missing funds, and it is useful to know that even when it comes to meeting the onerous burden of proving fraud, it is not always necessary to determine exactly what the funds have been spent on. This is demonstrated by the recent case ofR v TJC  EWCA Crim 1276. In this case it was held that it is possible to bring a charge against an attorney if there is ‘abuse of position’ under Section 4 of the Fraud Act 2006. The Court held that the circumstances would need to show that there is evidence of a general deficiency in the donor’s funds as a result of withdrawals made by an attorney. In this case, the Court of Appeal held that it was not necessary for the prosecution to present evidence of specific fraudulent transactions, i.e. identifying each withdrawal against expenditure. What was sufficient in this case was demonstrating that the total value of withdrawals by the Attorney (totalling approximately £75,000), exceeded the reasonable sums that would have been incurred over specific periods in providing for the donor given their needs. In this case, although it was accepted that some of the funds were spent on the donor, the Attorney had been spending “sums to such a degree and in such high quantities in certain given months that she could not possibly have been acting honestly”.
This case provides a useful reminder that even if it is not possible to ascertain exactly what the donor’s funds were used for, there may well still be scope to successfully argue the attorney has abused their position or breached their duties to the donor.
In general, where there is suspected financial abuse by an attorney, the Office of the Public Guardian (“OPG”) should be informed immediately. The OPG will investigate thoroughly and then, if appropriate, take steps to intervene such as cancelling the EPA/LPA, freezing the donor’s assets, arranging for a new attorney to be appointed, or referring the matter to the Court of Protection. There is usually an Adult Protection Team as part of the Local Authority who can also intervene where appropriate. As, the case of R V TJC serves to remind us, in some circumstances it may be appropriate to report the situation to the police, as a criminal investigation and potentially a prosecution could be appropriate.
Civil remedies for recovering the loss should also be considered, both in and out of the Court of Protection. It is for instance in the Court’s power to order the attorney to compensate the donor for losses. It may also be appropriate to consider an action for breach of fiduciary duty, negligence, or a claim for restitution on the basis that the attorney has been unjustly enriched through misuse of the donor’s funds. This kind of action would need to be taken by the donor, or if they lack the capacity to partake in proceedings, someone on their behalf such as a Court appointed Deputy.
If you would like to further discuss any of the information above please contact Jessica Bermingham from our Dispute Resolution team.