The Daily Mail caused controversy amongst Court of Protection practitioners this week when it published an article entitled “secret court in control of a two billion fortune”.
The article was, in our opinion, full of half truths and inaccuracies although it did raise an important question in relation to the interest rate currently paid by the Court (via the Court Funds Office).
The default position of the Court of Protection is that a person’s funds are held on their behalf and looked after by a deputy. Prior to the introduction of the Mental Capacity Act in 2007, a deputy was known as a “receiver”.
The Court of Protection itself has existed for many years. It was not introduced via the Mental Capacity Act but was refined and adapted after the Act took effect in 2007.
The Court itself is sympathetic towards deputies removing funds held in the Court Funds Office. Our experience is that a Judge is highly unlikely to turn down an application to bring funds out of the Court Funds Office to then be invested in accordance with financial advice.
It is not mandatory that a person’s funds have to be held in Court. When a deputy is appointed they are not compelled to open a Court account. The truth is that historically a good deal of deputies chose to do this as there was a period where interest was paid at a very reasonable rate of 6% gross.
However, a number of years have now elapsed since this was the case. The problem with leaving funds in the Court Funds Office now is that it pays a very poor rate of interest at 0.5% gross. It is probably fair comment that the Daily Mail refers to it as a “paltry” rate of interest.
This is not necessarily the fault of the Court of Protection, however. The Court Funds Office has been paying a particularly low interest rate for a number of years now. It is the responsibility of the deputy to be proactive in relation to this situation.
Therefore, any prudent deputy looking after someone’s funds that are unfortunate enough to be still held in the Court Funds Office at present would almost certainly be granted an appropriate Order allowing them to remove funds from the Court Funds Office and for them to be invested in accordance with financial advice.
There needs to be an application to the Court of Protection asking for an Order to remove funds. The application would need to exhibit a report from a financial adviser detailing their investment plans and demonstrate why this was a better alternative to funds remaining in the Court Funds Office.
We at Linder Myers have prepared a number of applications to the Court on this very matter. As a goodwill gesture to all non professional deputies out there who are frustrated by the low interest rates being paid we can hopefully offer them some certainty as to the cost of making the application.
The application itself would attract a court fee of £400. Solicitor’s fees should not be more than £1,500 plus VAT but Linder Myers this year will cap their fee at the Court fixed rate of £850 plus VAT. The report from the financial adviser would not usually attract a fee. The financial adviser would charge a fee for the investments and for the on-going advice but it is our experience that the percentage return rates each year net of fees that financial advisers can achieve for clients are well in excess of 0.5% gross.
If you do not already have a relationship with a financial adviser we are able to recommend a number of financial advisers who would be happy to speak to you allowing you to make a decision as to which financial adviser you would want to use. We are not tied to any firm of financial advisers and would not receive anything in respect of any introductions.
If you would like to take advantage of this offer then in the first instance contact our enquiries team on 0844 984 6444