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Financial abuse of the elderly must stop

It's the duty of the attorneys to ensure, with care, vigilance and with some guided legal foresight, that the elderly are protected from abuse, writes Andrew Morgan

Earlier this month, a Mr Mark Hudson from Gloucestershire was sentenced to two years in prison for misusing just over £92,000 of his vulnerable mother’s money. Mr Hudson had been entrusted to manage the financial affairs of his mother, Nancy, pursuant to a power of attorney.

In 2013, Nancy (who suffers from dementia) was moved to a care home and her house was sold.  The net sale proceeds were transferred to a joint bank account held by Mr Hudson with his wife, into which Mr Hudson also received his mother’s pension income.

In October 2016, police enquiries revealed that his mother’s monies were spent for the benefit of Mr Hudson and his family over the course of more than two years.  Mr Hudson admitted misusing his mother’s finances, but claimed that he did not realise that he was doing anything wrong, a position which found little sympathy with the court.

The above scenario is becoming all too common (but is by no means inevitable). With the UK’s increasingly elderly population, many of whom may have amassed substantial assets over their lifetime, the person entrusted with those assets is placed in a position of great trust and power, and with substantial responsibility. There is ample opportunity to stray from those responsibilities.

Between 2013 and 2016, the number of investigations into the conduct of attorneys and deputies (the latter are chosen by the Court of Protection to look after a vulnerable person’s affairs) has doubled.  Further problems seem inevitable as it is reported that in the first half of 2017, there were 322,573 registrations of powers of attorney (an increase of nearly 20 per cent relative to the previous year) and 172 attorneys and deputies were struck off in 2015 as a result of financial mismanagement or theft (a rise of over 150 per cent in two years).

Attorneys can have authority to manage the vulnerable person’s property and financial affairs and/or their health and welfare. In the case of the former, attorneys must use the donor’s finances in the best interests of the donor.

Attorneys can use such funds for day to day expenses, say, on food and clothing, and the purchase and sale of property. An attorney can also make gifts on the donor’s behalf to those people that the donor would reasonably have benefited, for example, birthdays of friends and relatives.

The attorney should seek the Court of Protection’s approval for more substantial gifts, say, large monetary gifts or allowing someone to live in the donor’s property without paying market rent. Ideally, this application should be made before the gift, but it may be possible to obtain retrospective approval. Attorneys who do not obtain approval run the risk of being ordered to reimburse the donor.

Attorneys should also keep their own finances and those of the donor separate, and prepare and retain accounts of the donor’s finances. The Office of the Public Guardian (OPG: the public body who supervises attorneys and deputies) may carry out spot checks and request the accounts. More frequent checks by the OPG would of course be welcome and go some way to tackling the problem of financial misuse, but would require the resources to do so. In the current political climate, it seems unlikely such resources will be forthcoming any time soon.

It can be exceptionally difficult for a donor to protect themselves from existing financial misuse – principally because at the time the abuse takes place, they will most likely have lost capacity and hence awareness of it happening.

In terms of minimising future risks, it is therefore important that donors seriously consider what powers their attorney should hold, and in relation to which aspect of their lives, and indeed who should act as attorney.  It is possible to instruct professional attorneys, say, solicitors, though the cost may limit this only to larger estates. In the right circumstances however, it could be money well spent.

Likewise, attorneys must familiarise themselves fully with their duties and responsibilities, and the consequences for failure to get it right.  If they have any doubts about their management of the donor’s financial affairs, they should seek legal advice or information from the OPG.

For those with concerns as to an attorney’s (or deputy’s) management of a person’s financial affairs, they should raise any concerns with the OPG.

Financial abuse is a sad sign of the times, but with foresight, vigilance and appropriate advice, it can be avoided.

Andrew Morgan is an associate at Russell-Cooke