Financial advisers have had limited interaction with this process. It is a very real threat if ignored and an opportunity not to be missed

1. Why all clients should have an LPA and role of
Financial Adisers in the process

2. The Issue
If you have a client who loses capacity & has no POA in place their families are in
for a torrid time
Assets will be frozen & someone will have to apply to the courts for “deputy”
status”. The court fee at £400 is not cheap but add a zero to that number for likely
legal costs. Even if successful there will be delays & costs eg indemnity
premiums to fund and ongoing legal & accountancy costs in reporting back to the
courts
All could be avoided if clients take out an LPA & advisers should be able to walk
clients into the office of an appropriate solicitor or clients can have a DIY LPA
Clients also hate having to justify spending what is after all their own money

3. Some key information
We have around 12m over 65’s. LPA registrations are up since 2010 from 129,000
pa to over 400,000 pa with a running total of around 2m meaning 83% of over 65s
still don’t have an LPA
Loss of mental capacity can be based on a gradual deterioration of faculties but
equally can be from a sudden stroke or an accident. Strokes are the largest cause
of loss of capacity in men & are higher in certain ethnic groups. We have 1.2m
stroke survivors in the UK
Lots of information on LPA’s is in the public domain eg
https://www.moneyadviceservice.org.uk/en/articles/if-the-person-you-want-to-help-has-lost-mental-capacity

4. What types of LPA are there
In simple terms they are in the form of LPA’s for financial decisions and/or for
healthcare decisions
DIY options exist at the public guardians office. The only cost is registration (£82
in England & Wales) but there is assistance for the low paid & zero fees where
certain benefits are claimed. For this you also get your paperwork vetted
Solicitor fees are variable & you may feel if you go down that route that you can
delay registration (and it’s cost) till loss of capacity occurs.
Many solicitors specialise in this area & offer advice & a sympathetic ear. They
may also offer discounted fees where say husband & wife take out one each

5. Financial adviser issues
If a client of yours loses capacity you will not be able to advise them or take
instructions.
Family members will expect your help but there will be little you can do
You may very quickly be in an adversarial situation. It is likely monies will
eventually be moved away from your advice & a complaint may follow
Even if your files show you recommended an LPA be considered is that really
enough? Did you highlight the risks & costs for example? Did you go further &
make them an appointment with a solicitor firm specialising in LPA’s

6. What should advisers do?
Make sure clients first of all understand the risks & make it come alive by talking to
them about a client who did not take one out & lost capacity
Make sure; assets are not all in one name, change bank accounts to joint names,
make sure any SIPP has regular income and not ad-hoc withdrawals, make sure
all bills are on direct debit etc. These steps will help but not eliminate problems
Research solicitor firms in your area (plus clients own solicitor) that you would like
to do business with & specialise in this area. Do your due diligence on them &
make sure their fees are reasonable & approach is friendly. Approach these firms
and let them know you have clients to pass on if they can reciprocate

7. The link to estate planning
Advisers who are estate planning should already be engaging with solicitors;
ensuring wills are in place & copying in on any planning, record of gifts cards etc
Clients with money in trust have by nature lost some access, NB may still be
retained rights. This puts more importance on the accessibility of non trust assets
The accessibility will be (at least temporarily) restricted if there is a loss of
capacity. Financial advisers must at least warn clients and highlight the risks (see
previous slides). They must also put this into the context of their estate planning
As the SRA now insist on due diligence on adviser firms you should build a
template. Do this and introduce clients to reinforce your relationships

8. Final step - consider other changes in practice
Advisers are used to having a robust repeatable investment process
A similar robust repeatable process may not yet be an absolute requirement for
estate planning clients but how often have we seen today's best practice
becoming tomorrow's compliance norm
For more help contact me on:
Email: kevinraftery@adviserskills.co.uk
Mobile: 07760 880626

9. The legal bits
Legislative references are based on Adviser Skills Ltd understanding of UK law &
HM Revenue & Customs practice. Tax & legislation are likely to change.
The value of reliefs depends on an individuals circumstances
No guarantees are given as to the effectiveness of any arrangements when
applied to individual clients
These are simply suggestions and Adviser Skills Ltd accepts no responsibility for
advice which may be formulated on the basis of these examples