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Discretionary investment management funds – are specific instructions to attorneys still required?

17 March 2022

An analysis of the current Office of the Public Guardian guidance regarding discretionary management funds when drafting Lasting Powers of Attorney.

The Office of the Public Guardian’s (“the OPG”) guidance on making Lasting Powers of Attorney advises that a specific instruction is required to allow attorneys to deal with investments managed by a bank or external provider (Discretionary Fund Management “DFM”).

This guidance was on the basis that an agent/attorney cannot delegate their authority and that they must carry out their duties personally. Unfortunately, many LPA’s have been made without this instruction, which has caused issues for the attorneys and donors involved. Some DFM providers have required the attorney to obtain an order from the Court of Protection to allow the DFM to continue or to allow the attorney to transfer funds into a DFM scheme, on the back of the guidance from the OPG.

However, a recent opinion written by independent consultant Caroline Bielanska, Solicitor, TEP which refutes the guidance set by the OPG has recently been accepted by the OPG. Bielenska’s opinion can be found here.

Bielenska argued that ‘There is strong argument that by both entering into a DFM contract and subsequently appointing an attorney under an LPA, it is implied that the donor wished the attorney to take over any contract capable of continuing, and it is implicit within the power that the agent is authorised so to act”. She argued further, that as an attorney is able to delegate decisions which they do not possess the relevant expertise to undertake, this would apply to transferring funds into a DFM scheme and would be permitted on the condition that the attorney believes what they are doing is in the best interest of the donor.

It would appear on the basis of Bielenska’s arguments, that there should be no problem in omitting the previously advised instruction from LPA’s in future and that there should be no further issues from DFM providers. Although Bielenska’s arguments are sound, continuing to include the aforementioned instruction within the LPA is still advisable, until the OPG update their guidance on the basis that it avoids any costly arguments by the DFM providers.

The complex nature of the law surrounding powers of attorney, as illustrated by Bielenska’s assessment of the OPG’s guidance, highlights the need for those considering putting in place LPA’s to take appropriate legal advice beforehand.

 

If you would like to discuss any aspect of this article further, please contact Lynne Bradey any other member of the Sheffield private client team on 0114 267 5588.

You can also keep up to date by following Wrigleys private client team on Twitter

The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.

 

 
 
 

 

 
 
 
Lynne Bradey View Biography

Lynne Bradey

Partner
Sheffield

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