Money matters

The Dementia Friendly Financial Services Charter, a recent initiative between the Alzheimer's Society and Lloyds Banking Group is to be welcomed. It aims to improve practices and facilities in branches and across the financial services sector, by providing customers with more choice, including the ability to flag up that they have dementia. It's also about improving training for staff on the unique challenges faced by sufferers of dementia.

Any steps taken to ensure that sufferers of dementia are dealt with in a suitably sympathetic, constructive and - above all - dignified way can only be a good thing.

However, it does seem ironic that at a time when financial institutions are taking steps to improve the service offered to people with dementia - at the behest of the UK prime minister, pursuant to his 'challenge on dementia' announced in March 2012 - the legal mechanisms through which individuals can manage their affairs are arguably more cumbersome than a few years ago.

When the new-style lasting powers of attorney (LPAs) replaced enduring powers of attorney (EPAs) on 1 October 2007, the stated primary purpose ?was to broaden the old regime, allowing individuals to grant powers to deal not only with their ?financial affairs but also to take health and ?welfare decisions on their behalf. Accordingly, ?two types of LPA were born.

Steps were taken to modify the existing process. Most notably, unlike EPAs (which were effective immediately unless the document expressly ?stipulated otherwise and only required registration once the donor was deemed to be losing mental capacity), LPAs are only effective once registered ?- and paid for.

LPAs also need to be signed by a 'certificate provider', who is usually but not necessarily a professional with relevant expertise. Rather than a prescribed list of people to whom notice must be given of any registration, as was the case with EPAs, the donor provides that list. These changes were designed to cut down on potential financial abuse - obviously a laudable principle.

Answering the critics

It should be noted that criticism of the new regime seemed, for a while, to be a fashionable and easy target for practitioners and that steps have been taken to address the upfront costs to donors, by a 15 per cent reduction of the court fee.

However, the new process for donors is more expensive and time-consuming than before. Arguably, it is also more difficult for legal practitioners to convince clients of the need to enter into a power of attorney.

Under the old regime, the relatively easy and inexpensive process could be fairly easily sold as a sensible addition to, for example, the will-writing process. The combination of (necessarily) higher legal fees and court fees, plus a fairly significant wait while the document is registered, can put some potential donors off for 'another day', which often never arrives.

Therefore, while the initiative within the financial services sector should be applauded, it can only work effectively if the appropriate legal mechanisms that underpin the system are as seamless and accessible as possible. As matters stand, there are, in my view, still improvements that could be made. A further review on court fees would be a start.

 

Matthew Evans is a partner at Hugh James

He writes the regular vulnerable clients comment in Private Client Adviser