LPAsOffice of the Public Guardian Issues Updated Discretionary Management Scheme Guidance

On 14 March 2022, the Law Society issued a press release stating that the Office of the Public Guardian (OPG) had agreed to change its guidance in relation to a property and financial affairs LPA needing to include express provision for attorneys to be able to manage investments via a discretionary investment scheme.

On 21 March 2022, the OPG amended their LP12 guidance to include new guidance relating to attorneys using discretionary investments schemes.

What was the OPG’s previous position?

The OPG’s previous position was that an attorney is not able to delegate their authority to someone else unless authorised by the donor in the LPA. This is relating to a common law rule of agency which does not allow a delegate to delegate their authority

As these discretionary schemes involve delegating investment decisions to an investment or portfolio manager, it was the OPG’s stance that a property and financial affairs LPA must give the attorneys authority to use these schemes or continue using any set up by the donor. If the LPA did not contain this authority, attorneys would need to apply to the Court of Protection to be given this authority.

The OPG provided standard wording for an instruction giving attorneys authority but did not guarantee that the wording would be accepted by any provider. WillPack have been incorporating this instruction into LPAs when requested for several years.

What is the OPG’s new guidance?

The OPG’s LP12 guidance now states that donors should seek legal advice on whether it is necessary to make specific provision within the LPA. This is because at least one major financial institution has taken the position that contracts relating to discretionary investment will come to an end on the donor losing capacity and any new investments by attorneys will only be permitted if there is an express instruction in the LPA.

WillPack’s Advice

If the donor has existing discretionary management schemes at the time of creating the LPA and they wish for the attorneys to continue using this in the event of loss of capacity, they should discuss with their providers whether they see the need for specific wording in the LPA. If that provider does not see the need to include express provision, the LPA could be created without an instruction giving the attorneys authority.

There is however the possibility that the donor may change investment managers in the future to a provider whose opinion is that the LPA should include express authority. It would therefore be advisable that express authorisation is still included in the LPA itself to ensure that the attorneys could continue to use that scheme.

Photo by Markus Winkler on Unsplash.

Chris Rattigan-Smith