Spend it wisely

Whether it’s champagne and caviar or beer and a burger, how we
choose to spend our money is down to individual taste. But is there
a point where our spending could seem so excessively frivolous that
we are considered incapable of managing our finances?

This is precisely the debate that has been stirred up as the result
of a situation in Greenwich, south east London, where the local
media picked up the case of an older man whose local authority had
taken control of his finances.

The man, who is in his eighties, was referred to the authority
after his doctor became worried about how he was handling his
finances. The man was thought to be using prostitutes and to have
spent a large sum of money in a short time. When the authority took
over his financial affairs his rent was in arrears, his accounts
were overdrawn and none of his utility bills had been paid.
However, since the local authority took control his financial
situation has improved significantly. He receives an allowance each
week to spend on personal items, an extra sum every month to spend
in a restaurant and his bills are all paid.

Yet many people are confused as to how a local authority can be
justified in stepping in and taking control of a matter as personal
as an individual’s finances. After all, we all have our little
quirks, and if we choose to fritter our money away surely that is
our business and not anyone else’s.

Whatever the moral debate, the council is acting appropriately as
it has been appointed as receiver by the Court of Protection, part
of the Supreme Court. The Court of Protection makes decisions on
how best to manage the finances of an individual who has been
assessed as lacking capacity and appoints receivers to manage a
person’s affairs while they are unable to do so. It relies on
medical evidence to confirm a lack of capacity, which could be the
result of dementia, learning difficulties, mental illness or brain
injury.

The Court of Protection comes into play when an individual has not
already nominated a person to manage their finances, should they
lose capacity, by making an enduring power of attorney. An example
would be where a couple have a joint bank account and are joint
signatories. If one of them has an accident and loses capacity the
account could be frozen. To access the funds the person who still
has capacity would need to apply to the Court of Protection for
receivership.

Most of the receivers the court appoints are lay receivers, such as
spouses, offspring or other relatives. But one-third are
professional receivers and, of these, one-third are local
authorities. Receiverships are monitored and accounts are submitted
to the Public Guardianship Office (PGO), the court’s administrative
office.

Two-thirds of the court’s clients are elderly, typically with
dementia, while the next biggest group comprises those who have
received compensation as a result of brain damage.

David Lye, chief executive of the Public Guardianship Office,
suspects that there is an unmet demand for the PGO’s
services.

He says: “Social services, health authorities and nursing homes
have face-to-face contact with people who might need our services.
We are trying to find ways to work through them so that when people
need our services they know we exist. If they are concerned that
there is somebody who may be vulnerable to financial abuse who
needs protection they should let us know.”

Financial abuse can manifest itself in many ways. In one case the
owner of a nursing home persuaded an older woman to sign the form
that appointed him as attorney, giving him access to her finances.
He made off with £1.9m, but the PGO was tipped off, someone
else was appointed as receiver and the money was reclaimed.

As there is no duty on local authorities to take on receivership
work, not all of them do so. About 100 authorities do, and a
network group, the Association of Public Authority Receivers, is to
be launched in March. But local authorities are usually not
appointed as receivers and take on the role only when there is
nobody else suitable.

John Ripley, receivership manager for Hampshire Council, says his
authority takes on such a role only as a last resort. Generally it
expects a family member to act, but this is not always possible. He
says: “Perhaps they are living some distance from the individual or
maybe the client doesn’t wish a member of their family to act.
Perhaps the family member is in poor health themselves or elderly.
In those circumstances if someone wasn’t available we would put
ourselves forward, particularly if social services have a role in
their care plan.”

In some cases local authorities will have a conflict of interest in
an individual’s finances. If the local authority is charging the
person for care then it can be inappropriate for them also to be
managing their money, says Pauline Thompson, policy officer for
community care and finance for Age Concern. She cites the example
of a local authority which charges an individual with mental health
problems for aftercare which should be free.

“If the receiver is nothing to do with the council and finds out
the council shouldn’t have been charging then they will challenge
it. Would it be challenged if the receiver was also within the
local authority?” she asks.

New legislation covering people who lack capacity has been a long
time coming but there is now a glimpse of it on the horizon.

A draft mental incapacity bill was published last year, although it
did not appear in the Queen’s Speech. The bill works from the
assumption that a person has capacity to make a decision unless it
is shown otherwise. It proposes a system that allows individuals to
nominate people to make health and welfare decisions for them, not
just financial decisions as now.

However, Richard Kramer, co-chairperson of the Making Decisions
Alliance, a coalition of organisations that has been campaigning
for legislation, says the codes of practice need to clarify the
situation for people whose capacity changes, such as those with
mental health problems.

“There needs to be recognition that some people may have
fluctuating capacity and may want to regain control of their
finances during times of capacity,” he says.

He also points out that people with learning difficulties need to
be given more support to make financial decisions. Although they
may not be able to enter into transactions such as mortgages they
may be able to make less complex financial decisions.

The case in Greenwich highlights the sensitivity needed in
assessing capacity. But there will always be some people who are
unable to make decisions for themselves. The job of the new
legislation is to make sure that it is these people, and only these
people, who have their decisions made for them.