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Opinion: Sandra McDonald

18 September 17

There is a risk of misuse of financial powers granted by power of attorney, but while it should be considered whether safeguards can be strengthened, the regime should not become unduly restrictive

by Sandra McDonald

There has been focus in recent weeks on the potential for (financial) “abuse” of powers of attorney (PoAs). In response, several articles, including one released by myself, concentrated on the safeguards within the Scottish PoA system, but I would not wish people to think that PoAs could not be, or are not, abused in Scotland.

The capacity requirement for the granting of a PoA is, I believe, one of the fundamental safeguards and that this capacity assessment has to be undertaken by a lawyer or doctor is added protection, but is there suitable training for this? One does see cases where one wonders “How on earth?” Should the assessment of capacity be restricted to those who have themselves been assessed as capable of assessing this?

Most grantors of PoAs in Scotland choose to consult a solicitor, which offers a significant safeguard. The Law Society of Scotland has detailed guidance both on taking instructions from vulnerable clients and on PoAs. Solicitors are advised to refer proposed attorneys to the code of practice and to the Public Guardian’s website, but most attorneys do not have a sufficiently clear understanding of the responsibilities of the role – which substantially increases the risk of misuse of the PoA. Could we do more at the point of solicitor contact to mitigate this?

The inclusion of specific, express, powers is a helpful safeguard, but many deeds have much the same powers, such that they look very similar, despite the fact that the PoA deed does not have to be in a prescribed format: does this defeat the specificity of the powers?

As the deed is free format, the grantor could add in any particular safeguards they may wish, but I have never seen additional commentary of this kind. Would a prescribed format, which directed one to insert safeguards assist?

Many PoAs appoint joint attorneys but grant them “joint and several” authority without specification, which allows opportunity for an attorney of ill intention to go unchallenged until too late. The appointment of joint attorneys is added protection, but I emphasise the importance of specifying fully in the document the extent of and any restrictions on the authority granted, and would advocate against “joint and several” appointments, without such detail.

Are there other ways of increasing protection? Should we offer notification to interested parties? Should attorneys have to have cautionary insurance? Should there be routine supervision? Could we make better use of existing safeguards?

The Public Guardian has a statutory remit to investigate concerns about the operation of a PoA, where these are reported. More could be done by us all to ensure the public are aware of, and use, this service. Linked to which, is increasing the general public awareness of what financial harm is and how to recognise this, as well as easing the discomfort felt about discussing other people’s finances.

There is a view that guardianship, perhaps because it is supervised, carries greater protection; my own view is that a PoA executed properly and used well offers no less a protection, or conversely, a guardianship used badly offers no greater protection.

We are obliged to consider the least restrictive form of intervention consistent with achieving, in this case, the purpose of safeguarding. This surely is a properly executed, and managed, PoA, in contrast to either an onerous and costly guardianship, or leaving matters to the chance of some loose informal arrangement.

In conclusion, there is much to be reassured about with our current system, but we are deluding ourselves if we do not recognise that there is abuse of PoAs. We have a potential opportunity over the coming years to influence change, as the relevant legislation is likely to be reviewed and we will be able to benchmark our system against other countries with information soon to be released by the Council of Europe. But any changes have to offer proportionality. We cannot make a burdensome, and thus less attractive, option for the majority in attempting to increase protections for the minority.  

Sandra McDonald is the Public Guardian (Scotland)

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