Wealth Management Update - Aug 19, 2014

Will the EU bring into force requirements for member states to create a public register of trusts?

Victoria Mahon de Palacios rounds up the latest developments in the sector

Guidance was issued by the president of the Family Division in January 2014 requiring Court of Protection judges to give permission for judgments to be published in cases concerned with the restraint of a person from acting as an attorney or deputy, or where such an appointment should be revoked or his or her powers should be reduced, with a view to there being greater transparency in the court.

The judgment in Re DP (CoP case no: 1235 1387) on 24 January 2014 was the first of such cases for which permission to report was given.

In this case, the public guardian obtained an order from the court to revoke and cancel registration of a lasting power of attorney (LPA) made by DP, who lacked capacity to manage her financial affairs. DP's attorney, her former gardener, had made a gift to himself of £38,000 and artificially remunerated himself for 365 days' house clearance and rubbish removal out of DP's monies as well as attempting to encash DP's investment bond and retain the proceeds.

In the judgment, the court explained the difference between police investigations into an attorney's actions and those by the Office of the Public Guardian (OPG); even if the police decide not to prosecute an attorney for theft or fraud, the Court of Protection can nonetheless revoke an attorney's appointment on the basis that they have contravened their authority under the Mental Capacity Act 2005 (MCA 2005), have breached their fiduciary duties under common law or have not acted in the best interests of the person lacking capacity.

The standard of proof in Court of Protection proceedings is lower than that in criminal proceedings where guilt must be proved beyond reasonable doubt.

Mental capacity

The report by the House of Lords' select committee, appointed to consider the MCA 2005, was published in February 2014 following feedback from professionals who work in the industry on the effect of the Act.

The 143-page findings were overwhelmingly negative. Although the committee was of the view that the Act was important, with much potential to assist the vulnerable, it found that the Act was not working well due to lack of awareness and understanding of it. The committee has made recommendations to the government for reform; the most pressing on the financial side being the need for the...