Financial Abuse By Attorneys – What Does It Involve?

The Office of the Public Guardian (OPG) has recently revealed a rise in the number of reports of attorneys inflicting financial abuse on protected parties.

A protected party (P) is an individual who has lost capacity and is unable to make decisions for themselves and by virtue of a Power of Attorney, they have nominated someone – usually a close relative – to manage their finances. The Power of Attorney is registered with the OPG and the attorney will then be able to manage P’s affairs with supervision. An annual report is sent to the OPG who will ask questions of the attorney and if satisfied, will approve the attorney’s conduct.

Financial abuse by attorneys

If the OPG is not satisfied with the attorney’s actions, including payments made from P’s funds, then the attorney can be ordered to pay sums back. The OPG is not the only one, however, who can raise concerns when an attorney appears to be misbehaving, going beyond the scope of his/her powers or behaving fraudulently. Relatives, friends, and other concerned parties, such as doctors and social workers can bring reports to the OPG which can trigger Court of Protection proceedings and – in exceptional cases – criminal action.

Acting as an attorney brings significant responsibility and it is imperative that the attorney acts in P’s best interests. There is, curiously, no formal definition of “best interests” but there are a number of factors that are taken into account. This does include making a decision that is most likely to preserve P’s assets, or give P the best return (if, for example, investing savings or managing trust monies) but it is not just a case of financial common sense. If a Court of Protection Judge is asked to look at whether a financial transaction is in P’s “best interests”, the Judge will have regard to P’s character, personal preferences and wishes and feelings (as far as they can be expressed).

This does mean that in some circumstances, gifts to relatives, donations to charities P is known to care about and incurring expenses to ensure that P experiences activities, social events and so forth to ensure that P’s lifestyle remains engaging. Attorneys should always check with the OPG if the Power of Attorney does not specifically authorise these expenses, but the Court has adopted a more relaxed approach to allowing attorneys to spend a reasonable amount of P’s funds on P’s own lifestyle, and on gifts provided these are for P’s benefit.

There is, however, a fine line between allowing P to enjoy his/her own funds and using P’s funds excessively. Attorneys who have, for example, paid for P to go on expensive holidays and used P’s money to buy tickets and accommodation for other friends and relatives are arguably straying into the arena of financial abuse. The same can be said of buying items for themselves which might benefit P (e.g. a car used to transport P) if that item is not only used for P’s benefit. This type of activity, coupled with greater awareness of fraud and financial abuse, is perhaps why there have been more reports of improper conduct by attorneys.

If you do believe an attorney is acting beyond his/her established powers, then always contact the OPG. An attorney can be removed from his role in some extreme cases and another relative can apply to the Court of Protection for a deputyship order, or if they are not in a position to act, a professional deputy can be appointed.

Financial abuse by attorneys

How can Nelsons help?

Lewis Hastie is an Associate in our Dispute Resolution team, specialising in inheritance and Court of Protection disputes.

If you have any questions regarding the subjects discussed in this article, please contact Lewis or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.