Security Bonds for Attorneys
Once upon a time, in a land far away, everyone had a security bond, and there was no financial harm allowed!
Ah, if only! It has been our passion for many years that security bonds provide financial safety for people who are, or become, vulnerable, whether that person has chosen their representatives or not.
Unfortunately, although the bonds are readily available, not all are mandatory and remain a choice.
A mandatory bond would:-
- Provide an all-inclusive financial safety net where everyone eligible can get a bond
- Act as a deterrent to anyone thinking of using their powers illegally or when those powers are not going to be used for the good of the Donor/Granter or Claimant
- Provide cover where there is no mandatory oversight
The smallest group of vulnerable people are lucky enough to have the benefit of a mandatory bond – P, the client, the subject of a deputyship. The others, Donors (LPA) and Claimants (Appointeeships) do not have the benefit of a mandatory bond or regular oversight and they continue to suffer financial losses where there is little accountability when things have gone wrong, whether that is intentional or accidental. Because there is no official body collating the details, no one knows how many losses have been incurred, what effect they have had on Donors or Claimants and what legal action was possible after theft, fraud or coercion was found.
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Bonds are only one small part of the story, however.
For LPAs, many solicitors and others provide excellent checks and balances when they are talking to Donors about making an LPA. We have witnessed training that includes awareness about family backgrounds and dynamics, asking questions when one family member is appointed above another for instance. The emphasis is always on making sure that the Donor understands the concept of the LPA, what they are signing and what will happen in the future.
Lawskills has also presented Guidelines for the preparation of LPAs.
Concerns were raised at the consultations held by the OPG to discuss the new online application system for LPAs. These included the fact that the Certificate Provider no longer needs to be a professional and the Witness could be “online” but also that there was no mandatory bond required.
A podcast featured on Radio 4’s You and Yours You and Yours – Lasting Power of Attorney Fraud – BBC Sounds Presenter: Shari Vahl Producer: Tara Holmes told the shocking story of an LPA that had been registered by the OPG and the “Attorneys” acted upon it by attempting to purchase a property. It transpired the “Donor” knew nothing about the LPA or the fictitious sister who had been appointed her Attorney and the fact that her property was empty (she was away looking after her terminally ill mother) allowed the collection of post by fraudsters.
Worse was to come however, when she tried to cancel the fraudulent LPA. By the time the podcast was featured the LPA had not been returned for the OPG to rescind it although it is mentioned on the BBC website that the LPA has been removed from the register, the police informed and the MoJ has confirmed it will be overhauling the system.
It should be noted here that only a mandatory bond could have responded in this instance as the fraudulent Attorney would not willingly sign up to a bond that would hold them financially responsible for their fraudulent acts that had resulted in a financial loss. Had a mandatory bond been a requirement, the fact that the Attorney wouldn’t sign up would be the first flag that there was a problem! There would be few individuals that would deliberately sign themselves up to such a commitment when their sole purpose was theft so one could argue that this awful situation, and a near miss it has to be said, may not have happened if a mandatory bond had been a requirement.
Many other awful tales are out there you only have to do a simple search for them!
We are entering one of the most financially challenging times not seen on this scale for over 40 years. Money seen as an inheritance waiting in the wings, confused Donors who probably wouldn’t miss funds needed elsewhere, or compensation for doing a horrible job, will all be seen as legitimate reasons to steal money and assets that do not belong to those Attorneys. Money that should be used for Donors’ wellbeing, care home fees, medical assistance and many more things needed in later life when you are vulnerable and ill.
Good practices, good training, professional advice, adequate safeguards and, yes security bonds, will allow Donors to have the benefit of family, friends or professionals helping them in their hour of need with the risks mitigated as much as possible and a bond there to pick up the financial pieces for theft, fraud and the additional cover of the Honest Mistake clause for Lay Attorneys.
While the bond is not mandatory it is still considered good practice by many professionals and a safety net which starts at £20 for the lifetime of an LPA or EPA and seen as a valuable addition to information given to clients to enable them to make their choices with all the information in their possession.
Family dynamics change over the years and money does awful things to some people. Mistakes can and do happen and Lay Attorneys also deserve peace of mind. Perhaps an honest mistake is found during probate? If the Lay Attorney has not made a financial gain or allowed another to do the same, the bond can be called in during 2 years after the death of the Donor, so protecting family members and the Donor’s wishes at the same time.
Please visit www.securitybonds.co.uk or email firstname.lastname@example.org if you have any queries or would like to be featured on the Information Hub on our website that provides links to firms for specialist advice and/or services.
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