Legal
Can Lasting Powers Of Attorney "Go Digital" Safely?

The use and potential misuse of LPAs has been a subject of controversy in the private client legal and wealth management field for some time. The UK government is planning reforms, including making these powers more digital-friendly. What are the risks to this approach?
The UK government recently rekindled a debate by proposing
changes to the
Lasting Powers of Attorney system. The authors of this
article, Tim Snaith and Samantha Warner, are partner and
associate, respectively, of the private client team at law firm
Winckworth
Sherwood.
The editors of this news service are pleased to read this news
article, and invite responses. Contribute to the debate! Email
tom.burroughes@wealthbriefing.com
and jackie.bennion@clearviewpublishing.com
The government created some excitement in the estate planning
world a few weeks ago when it launched a consultation into its
proposed overhaul of Lasting Powers of Attorney (“LPAs”). An LPA
is a legal document that enables the person making the LPA (“the
donor”) to appoint those they trust to act as their attorneys in
relation to financial and/or health decisions. With an ageing
population, and banks and others are increasingly insisting on
only dealing with named account holders, LPAs have understandably
seen a real rise in popularity.
Launched in 2007, LPAs represented a significant change to the
old Enduring Power of Attorney (“EPA”) system which had been in
place since 1985. LPAs brought with them a modified approach to
the question of mental capacity and a far more collaborative way
of working with the donor. It also created the Office of the
Public Guardian (“the OPG”) to administer and maintain a register
of LPAs. Today, there are over 4.7 million LPAs and EPAs on that
register, with around 917,550 having been registered in 2019/20
alone.
The LPA system was undoubtedly a change for the better, but the
increased protections made the documents and the process more
complex. As a result, 14 years on, the government has considered
what improvements could be made and has published a set of
proposals to modernise LPAs. The consultation is open to all and
runs until 13 October 2021.
Reducing complexity, saving paper and time
Each LPA is over 20 pages long, requires a minimum of six
signatures, and must be signed in a strict order. This complexity
not only leads to errors but can also act as a significant
deterrent to those considering creating LPAs.
Although LPAs can now be created online, the legislation requires
the final completed forms to be printed out, physically signed,
and then posted to the OPG for registration. This process led to
around 19 million sheets of paper being received by the OPG in
2019/20, with a similar number of sheets being sent out to the
public.
The error rate is also high. Around 19 per cent of LPAs submitted
to the OPG by members of the public, and 6 per cent of LPAs
submitted by solicitors, cannot be registered as they contain
errors, and the OPG is unbending in its approach to corrections.
Where OPG staff could easily email the donor to check the
spelling of a witness’ middle name, they reject imperfect
documents and return them for resubmission instead. Even at the
lowest error rate, in excess of 55,000 documents are processed,
reviewed and returned every year.
This not only causes delays at what can be a very difficult time
for families, but if the donor has lost mental capacity since the
document was signed, it will render it invalid and the attorneys
will find themselves facing a costly and time-consuming
application to the Court of Protection instead.
The government evidently sees digitisation as both the
sustainable way forward and the solution to reducing errors.
The role of the witness
One of the more radical proposals is to replace physical
witnesses with a digital ID verification and signature procedure.
Given that witnessing errors make up 74 per cent of errors on
imperfect LPAs, it is easy to see why this suggestion has been
raised, but will removing the human element remove an essential
safeguard, and lead to an increase in the fraudulent creation and
use of LPAs?
The government doesn’t think so. It argues that witnessing
provides very limited protection and proposes to rely on the
“certificate provider” to confirm that the donor is aware of the
nature and effect of the document and that s/he has sufficient
understanding to be able to enter into the LPA. There would then
be a conditional registration system under which the OPG runs a
digital ID check on the donor and the same ID check plus relevant
criminal record checks on attorneys. Until those checks are
passed, the LPA would not be registered.
Immediate registration and a fast-track
service?
LPAs must also be registered with the OPG before they can be
used. This was seen as an essential change from EPAs to increase
oversight and to prevent abuse. However, an LPA does not need to
be registered as soon as it has been signed and many people
prefer to keep their LPAs signed but unregistered until they lose
mental capacity or need help from their attorneys. As
registration is the first time the OPG can check the forms, and
19 per cent are rejected, many errors cannot be rectified by the
donor given that s/he has lost capacity. This is a significant
issue.
The consultation therefore asks whether the legislation should be
changed to require immediate registration or whether a checking
system could be introduced at signing-stage to reduce the risk of
rejection. The government appears to favour immediate
registration, but it needs to think carefully about whether this
would discourage those who perceive registration as handing over
power to their attorneys too soon.
There is also a proposal for a dedicated fast-track, higher-cost
service for those who need an LPA urgently. The government
indicates that it would prefer to focus on streamlining the
service for all and reducing the registration time to a
tantalising 14 days but given the frequent delays beyond the
current 40-day registration target, a dedicated fast-track is
certainly an attractive option.
Objection! Objection!
The ability for interested parties to raise concerns about
registration is an essential safeguard in the LPA process,
particularly if family or friends suspect undue pressure or a
lack of capacity. Under the EPA system, the donor had to name a
third party to be notified when the form was registered but this
was removed in 2007 as many donors did not have a sufficiently
wide social or family network and this section became a real
obstacle. Instead, LPAs include an optional section where
the donor can choose someone to notify. As it is not
compulsory, it offers no safeguards and is rarely used. In
short, it is confusing for the donor and verges on pointless.
The proposals discuss the range of people permitted to object to
registration, but there is no suggestion of a replacement
notification system. The government needs to give serious thought
here to how family and friends can be made aware that an LPA is
being made, not just how they can object when they eventually
learn of registration.
Change welcome but care must be taken
LPAs and their predecessor EPAs have been around for 36 years,
but they remain as relevant and necessary as ever. Many of the
government’s proposals seem sensible but we have long been
arguing that better training of OPG staff, better customer
service, and a more flexible and pragmatic approach to correcting
errors would solve many of the stresses and inefficiencies of the
current system.
However, technology has moved forward significantly since 2007
and we hope it will enable the government to offer a
collaborative and modern LPA system that also protects the
elderly and vulnerable from fraud, coercion and abuse.