Proven Practice: personal finance and the Mental Capacity Act

The Social Care Institute for Excellence presents findings from research on the workings of the Mental Capacity Act in the realm of personal finance

The Mental Capacity Act 2005 was created to enable people, with support, to make their own decisions in a variety of contexts. It also provides legal protection for people who are required to make a decision for a person who lacks the mental capacity to make one for themselves. For people with mental health problems the act helps to ensure they are not discriminated against.

In terms of personal finances, the act helps people with mental health problems deal with their money unsupported or, when necessary, supported by a suitable person of their choosing. It covers decisions made in banks, building societies and post offices for example when opening an account or withdrawing money. It also applies to the staff who work in these financial institutions and the family members, friends or advocates who may be required to make decisions on behalf of someone deemed mentally incapable.

Under the Disability Discrimination Act 1995 it is illegal to discriminate against individuals with mental health problems as customers of banks, building societies or post offices. Prior to this act, people with mental health problems sometimes found it difficult to open accounts or withdraw money because bank staff thought them incapable of making these decisions.

The act operates under five principles:

● Every adult has the right to make their own decisions unless it can be shown they are incapable of making a decision.

● Individuals should be supported to make their own decisions whenever possible.

● A person has the right to make decisions others may view as strange without being deemed incapable.

● An individual making decisions on behalf of a person without capacity must do so in their best interests.

● Decisions made on behalf of a person deemed to be lacking in capacity should be the option that is less restrictive of that person’s basic rights and freedoms, while acting in their best interests.

Application in a banking context

● Bank staff should assume an individual is capable of making their own decisions unless they have grounds to believe them incapable.

● Individuals should be provided with all the information they need to make a well-informed decision.

● Information should be provided in a way the individual understands, taking into account any hearing or speech difficulties.

Factors affecting capability

A person with mental health problems may find themselves incapable of making decisions during a time of crisis or when distressed or confused. Medication can also impair mental capability. If an individual feels their ability to remember or interpret information from the bank or make decisions is undermined by factors such as these they should consider requesting support from a friend, family member or advocate, or requesting to delay the process. The bank staff member, if aware of any of these factors, should suggest this to them. They should also explain clearly why they have chosen to delay or cancel the transaction.

If a bank staff member believes an individual to be mentally incapable the individual can, if they believe themselves fit to carry out the transaction, request a meeting with the bank manager and if that fails to provide the required outcome, complain to the financial services ombudsman.

Making decisions for others

When making a decision for someone deemed incapable, the two guiding principles are that it should be in their best interests and be the option that is less restrictive of their basic rights and freedoms.

Legal powers must be obtained before an individual can make decisions involving another person’s money. There are three types of legal power, the first of which is lasting power of attorney (LPA) through which a person appoints someone (family member, carer etc) to make decisions on their behalf.

The attorney can make decisions when the person has capacity or only when they are incapable. An enduring power of attorney is similar to LPA but has to have been made before October 2007. Additionally the court can appoint a deputy to make financial decisions on behalf of someone deemed incapable.

To determine the best interests of a person who lacks capability the following will normally be considered:

● Their past and present wishes and feelings, beliefs and values.

● Any written statement the person has produced.

● Anyone the person has requested be consulted.

● The views of others, such as family, friends or support staff, who have an interest in the person’s welfare.

● The views of the person.

It is a good idea for a person with an LPA to discuss the arrangement with their bank to prevent misunderstandings about the role and necessity of the attorney when carrying out transactions.

An attorney cannot force the bank to carry out a transaction should bank staff be reluctant to do so but they can ask the manager to intervene and provide reasons why the transaction has been delayed. Whether or not a person has an attorney, the bank will still require identification (usually two types, one photographic and the other stating proof of address).

Practitioners’ messages

● The Mental Capacity Act 2005 means every individual has the right to make their own financial decisions unless they are incapable of doing so.

● Bank staff should always assume an individual with mental health problems is capable of carrying out a transaction unless they have grounds to believe they are incapable.

● Banks and bank staff are obliged to give people information and assistance in a suitable format to help them to make informed decisions.

● At some times a person with mental health problems may be incapable of making a decision. In this case a person they have previously chosen may be charged with making a decision on their behalf.

● The person acting as an attorney must act in the best interests of the person they make making the decision for.

● Best interests are determined by considering the wishes of the individual and other parties.

● When possible the attorney should be introduced to relevant members of the bank staff to prevent misunderstandings.

Further information

Expert guidance on mental health

Research abstracts: mental capacity

Author Office of the Public Guardian

Title Making decisions…about your health, welfare or finances. Who decides when you can’t?

Reference London: Office of the Public Guardian, 2007. 43p

Abstract This booklet gives you information about the Mental Capacity Act 2005, which affects anyone who is unable to make some or all decisions for themselves.

Author Office of the Public Guardian

Title A guide to enduring powers of attorney

Publisher London: Office of the Public Guardian, 2008. 38p

Abstract This booklet is designed to assist those who have either made an enduring power of attorney (EPA) or are acting as an attorney under an EPA.


Title Banking on good decisions

Reference Learning Disability Today, November 2008, pp.19-21

Abstract More people with learning disabilities could achieve financial independence if banks and their support staff had a clearer idea what capacity really meant. This article briefly looks at the findings of recent studies. It then provides an overview of an easy read guide produced by the Foundation for People with Learning Disabilities on how the Mental Capacity Act 2005 may affect people with learning disabilities as customers of banks and building societies.

Author BROWN Robert BARBER Paul

Title The social worker’s guide to the Mental Capacity Act 2005

Reference Exeter: Learning Matters, 2008. 160p, bibliog.

Abstract A guide for social workers on working within the requirements of the Mental Capacity Act 2005. It provides checklists and exercises to help people to ensure compliance with the requirements. Where an adult lacks capacity to make a particular decision it sometimes falls to professional staff to make a decision for them. Until now there has been little statute law to govern how such decisions should be made. This book provides a practical guide to working within the Mental Capacity Act, identifying situations where staff will need to be familiar with the act and code of practice, and providing checklists to help people to ensure compliance.

Author LYNCH, Teresa

Title The Mental Capacity Act 1: advance decisions.

Reference Nursing Times, 21.10.08, pp.28-29

Abstract Outlines the key principles and implications of the Mental Capacity Act 2005 and examines healthcare professionals’ responsibilities in relation to advance decisions.


This article published in the 22 January edition of Community Care under the heading Helping people with mental health problems deal with money

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