Joint Committee on the Draft Mental Incapacity Bill Written Evidence

123.Memorandum from the British Bankers' Association (MIB 1220)

  Thank you for the opportunity to respond during the consultative phase of the draft mental incapacity bill and for extending the deadline for comment. This is a sensitive and complex area of law and one where bank branch staff are acutely aware of the potential risks and responsibilities that arise in the course of their dealing with those who act on behalf of a mentally incapacitated person (P).

  The BBA has been working with its members on such issues for the past year and has recently published guidance for bank branch staff to assist them in their dealings with Attorneys (A) and Deputies (D). A copy of the guidance is enclosed.


1.   Point of registration of a Lasting Power of Attorney (formerly an EPA)

  The draft Bill proposes that the new LPA is registered when that power is granted, rather than as present, when the donor of the power is or is becoming mentally incapable. The difficulty in this approach, however, is determining the point at which the donor is actually incapable and thus the point at which a bank is correct to deal only with the A. It is at the point of registration that banks' treat the Donor as being incapable and will only act on the instructions of A. The current treatment of Donors and A, therefore, is driven by registration of the LPA, which is entirely practical, and we are concerned that changing the point at which LPA registration takes place will give rise to serious operational difficulties for bank branch staff. If the LPA is to be registered as soon as it is granted, banks will not be apply the same rule because there can be no presumption of mental incapacity.

    —  We would urge the Joint Committee to leave unaltered the current process for registration of an LPA.

2.   Clause 6—the General Authority

  As discussed above, registration of an LPA or award of a Court Order provides certainty for bank branch staff in appropriately identifying when and with whom they should liaise on behalf of P; the LPA or Court order providing "evidence" of their authority to act. However, where there is no LPA or Court Order and, particularly where P is in receipt of direct benefit payments and/or Local Authority Payments, there are reputational risks to banks (i) should they allow access to P's account where there is no evidence of proper authorisation, but equally (ii) if they do not allow access to P's account and P is unable to gain access to benefit because it has been paid directly into their bank account.

  Given this dichotomous reputational risk to banks should they permit/not permit access to P's bank account, BBA members are currently considering whether a third party "Appointee" should be able to open or operate a bank account on behalf of P. We would envisage an `Appointee' would only be permitted to operate a P account in a specific set of circumstances (such as account turnover of less than £2,000 per month), and are raising this with relevant bodies such as the Public Guardianship Office, the Department for Work and Pensions and the Department for Health.

  In allowing an "Appointee" access to a P bank account, our members would also first wish to satisfy themselves:


    That they can deal with a third party `Appointee' under the provisions of the bill,


    With whom they are dealing, and


    In what capacity the `Appointee' is acting on behalf of P

  At first glance, Clause 6 appears to grant third parties authority to handle P's money where necessaries are to be paid, yet paragraph 36 of the Explanatory Note to the bill goes on to say that,

  Sub sections 2 and 3 need to be read with clause 33 (P must pay a reasonable price for necessary goods and services supplied). If a person acting under the general authority arranges something for P which costs money then the person can promise that P will pay, use money which P has in his possession, pay himself back form P's money in his possession or consider himself owed by P. These sub sections do not allow access to funds held by, for example, P's bank or building society account.

  This then suggests that those who act on behalf of P should not have access to P's bank or building society under the General Authority. In view of the concerns we have outlined above, it would be helpful if the relationship between the draft bill and the corresponding Explanatory Note were clarified. It would further seem appropriate that the bill include a deeming provision for third parties, i.e. that the third party may be deemed by the bank to have authority to act on behalf of P where the third party is able to provide confirmation of this. This might, for example, take the form of a letter from the Benefits Agency or the Local Authority.

    —  The relationship between Clause 6 and the Explanatory Note concerning access to P's bank or building society account should be clarified, bearing in mind the difficulties posed to P where there is no LPA or Court Order and P is in receipt of benefits paid directly into a bank account and/or Local Authority Direct Payments.

    —  Consideration should also be given to establishing a minimum threshold amount that could be withdrawn by a third party `Appointee' which would provide further clarity and legal certainty.


1.   Clause 3

  There appears to be an inconsistency between Clause 3, which says that incapacity must be firmly established and there is a presumption of capacity, and the rest of the bill, where the general authority can be exercised where it is reasonably believed P has lost capacity.

2.   Clause 12 (5) (c)

  These sub sections refer to the annulment or dissolution of a marriage but perhaps this should also include a provision, where there is already an Attorney, to enable the spouse of the Donor to become the Attorney following a subsequent marriage.

3.   Clause 34—the Court of Protection

  We would welcome clarity on the approach of the Court of Protection where an individual's assets or income is not considered sufficient to warrant the involvement of the Court. Presently, the bill is silent in this respect yet we understand that, in practice, the Court may not become involved unless certain monetary criteria is met.

  We would appreciate being kept informed of developments and should you require any further clarification on any of the points we have raised, please do not hesitate to contact me.

Samantha Mitchell


October 2003

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