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
2. Clause 6the 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
In allowing an "Appointee" access
to a P bank account, our members would also first wish to satisfy
That they can deal with a third party `Appointee'
under the provisions of the bill,
With whom they are dealing, and
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
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
3. Clause 34the 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.