Why a Small Payments Scheme could have a big impact

Anyone who has tried to deal with financial matters on behalf of someone else will know just how many barriers are in place. While there are very good reasons for this, it can be hugely frustrating for well-intentioned family members who simply want to access funds for their loved ones’ benefit.

The Mental Capacity Act 2005 was designed to give some regulation and definition to the issues around supporting people who may lack mental capacity, to make their own decisions, in their own best interests. The law around capacity is famously grey and uncertain, meaning that families/friends and professionals face a potential minefield when it comes to managing the financial affairs of someone who has lost capacity, either temporarily or permanently.

The overarching point is that the correct authority to act for someone who does not have capacity must be in place, if action is required. In some cases, that may be provided through an Ordinary Power of Attorney (OPA), but this can only be made while the person making the OPA (‘the Donor’) has capacity and is only valid while the Donor retains capacity. It is normally used to manage specific tasks that the Donor wants someone to deal with for them, such as the sale of a property or the paying of bills while travelling etc. OPAs are far less frequently used than Lasting Powers of Attorney.

A Lasting Power of Attorney is created while the donor has capacity and its primary difference to an OPA is that it ‘lasts’, which means that it can still be used if or when the donor loses capacity. People make Lasting Powers of Attorney to appoint their attorneys (often a family member or friend) with the intention that they will take over the responsibility for making various decisions over the Donor’s property and financial affairs. Attorneys can act under a Property & Financial LPA while the Donor has capacity and when the Donor has lost capacity.

There is a Health and Welfare LPA, which, unlike the Property and Financial LPA, can only be invoked and used when the Donor has lost capacity or is unable to speak for themselves in terms of their health and welfare needs.

Problems arise where neither an OPA nor an LPA has been prepared and there is no one ready and authorised to step in. Where someone has lost mental capacity, this can be a particularly difficult situation to work through and it often requires the involvement of the Court of Protection to resolve.

The Court may make a ‘one-off order’ relating to a particular decision that needs to be made, or appoint people (‘deputies’) to act in the best interests of the mentally incapacitated person. The role of a deputy is similar to that of an attorney appointed under an OPA or an LPA.

The trouble is that the Court route is often lengthy, costly and it may not be in the best interests of the loved one who needs taking care of.

In some situations, those caring for a person who has lost mental capacity simply need to access small amounts of money, fairly quickly, to meet that person’s needs. It is this issue that has become a focus for the Ministry of Justice, which is currently consulting on proposals to introduce a ‘Small Payments Scheme’.

What would a Small Payments Scheme mean for someone caring for a mentally incapacitated person?

The idea is that they could access small amounts of a mentally incapacitated person’s money without having to go through the process of getting an order from the Court of Protection. It would be an interim measure; something to have in place before long-term arrangements were finalised. The Ministry of Justice points out that the Scheme would be useful in situations in which families, friends and carers find the Court of Protection route ‘too complex or disproportionate to the amount of funds involved’.

The proposals include that:

• Payments (of up to a combined sum of £2,500) could be made for a six-month period from one account
• It would be possible to extend those six months once if the £2,500 figure had not been reached
• The Scheme would be run by financial services firms, such as banks and building societies
• The Scheme could be used by ‘someone who could prove their suitability, rather than just family members’

The consultation will be open until 12 January 2022, although there is some way to go before we will begin to hear how the views of participants could shape these proposals. A key consideration will be the Scheme’s security, as well as its ability to provide a simpler, faster and more straightforward process to navigate than that which is currently in place. But, as a lawyer who regularly helps families navigate these challenging issues, and as someone who personally manages the affairs of someone who has difficulties, I welcome the attempt to clarify and improve things for those trying so hard to serve and protect a loved one’s best interests.

For advice about OPAs, LPAs or Court of Protection applications, contact Vicky Mansell 0808 256 2917 or email [email protected].