Discretionary fund and LPA

I have received an email for a client I dealt with some years ago and prepared a lasting power of attorney for his mother.

He has now received correspondence from an investment manager stating that due to changes within the OPG, they can no longer act on a discretionary basis and client had to apply to the court to obtain express permission. The email strangely then says they will continue to act for now so as to avoid problems.

Firstly, what is the current thoughts of the group on the OPGs position and whether it is correct ?(appreciate this has probably been discussed before). Secondly, is it worth me corresponding with the stock broker to try and change their mind?

Finally, assuming the answer to the above is no, assume an application to the court is likely to be successful, if time consuming and costly?

Delagatus non protest delegare - probably the only Latin maxim I can recall from Law School - I believe is the issue at hand. The Law is I believe clear and well established on this.

In simple terms the stockbroker can’t act on a discretionary basis but could act on an execution basis. Not as convenient for them but not impossible.

I have no idea how long an application would take but I doubt the expense and likely time involved is worth it.

Lee Young
Solicitor, Trust & Estate Practitioner, Chartered Tax Adviser

Frettens LLP

The OPG has adopted this position for a while and whilst I believe there has been discussion about launching a test case, my understanding is that the length of time before the matter has come to court has been such that donor has not survived. It’s difficult to see such applications as “urgent” as, should the donor have a limited life expectancy, is it in their best interests to pursue what can only be a short term investment policy.

I doubt many stockbrokers or investment managers would go against the OPG’s position, and the time and expense of seeking to persuade them might better be applied to making the relevant application to the Court of Protection.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Thanks, just to clarify, I meant if I apply to the court of protection to amend the document as the stockbrokers are requesting, the court is likely to agree?

On the basis that STEP was looking to run a test case, the position of the Court of Protection has yet to be established. Whilst one would like the CoP to approve such an application …

If the client has sufficient capacity, consideration might be given to her granting a new LPA incorporating the words recommended by the OPG to permit the attorney(s) signing a discretionary investment management agreement. It would likely be less costly than seeking CoP approval (I believe the application fee is still £400).

When the Mental Capacity Bill was under consideration, I was one of many who sought to persuade the MoJ to extend s.15 Trustee Act 2000 to attorneys. Whilst it fell on deaf ears then, perhaps the powers that be might be more accepting of the possibility nowadays?

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

1 Like