Last updated on June 20th, 2018 at 11:36 am

Specific wording in LPA

The new guidance suggests that when creating a financial lasting power of attorney (LPA), donors should include specific wording to allow their attorneys to delegate investment management decisions to a discretionary investment manager, such as a bank or IFA. The OPG also suggests that without specific wording within an LPA, attorneys would not be able to use a discretionary management service and would have to make investment decisions themselves.  It also suggests that the wording should be checked by the relevant financial institution before the LPA is registered.

Furthermore, the guidance says that if an LPA has already been registered without such express permission, the attorney must apply to the Court of Protection for authority to appoint an investment manager.

Issues with existing LPAs without specific wording

Clearly this guidance is causing difficulties for those attorneys who are already using an investment manager under an LPA that has been registered without the specific clause.  Some are finding that such investment managers are now refusing to act and, whether they like it or not, attorneys are having to make financial investment decisions themselves.  Where the attorney does not want to act in this way, and if the donor lacks capacity and is unable to make the change to the LPA themselves, the only way that attorneys are able to maintain, or engage, the services of discretionary investment managers is to make an application to the OPG, which is expensive and can take some time, and could lead to potentially missed investment opportunities.

Graysons can ensure LPA is properly worded

There is some confusion amongst discretionary investment managers at present regarding the new OPG guidance.  Not all institutions require a specific inclusion to allow them to act, and those that do require it don’t all accept the same wording.  Whilst some clients are happy to make investment decisions, not all are, and some are finding themselves in the position of unintentional investor, without having the knowledge or skill to be sure that their investments offer the best return or protection for the donor’s money. Also, even where the potential donor’s assets are not currently managed by a discretionary investment manager, if the LPA is set up without any wording relating to it, the attorney will not be able to engage such services in the future, should the need arise, without applying to the OPG.  For this reason, it is vital that this issue is considered by all potential donors.

Preparing and registering an LPA yourself may seem like a simple procedure on the surface, but matters such as this issue can end up causing serious, and expensive, problems if they are not properly considered.  So, if you wish to set up an LPA where some of your assets continue to be managed by a discretionary investment manager, please take early advice to ensure that the correct wording is used.  Or, if you are the attorney of an LPA that includes the use of an investment manager, but that doesn’t include the necessary wording, please contact our specialists.  Our LPA service includes all the advice and guidance you need to ensure that LPAs meet the exact individual needs of our clients.

For further information on LPAs see our web pages.