Investment by LPAs in discretionary investment management services

The Office of the Public Guardian (OPG) has agreed to change its guidance on the need to have express provision for the management of investments via a discretionary investment provider within a financial lasting power of attorney (LPA).  This is good news, as it means that those acting as LPA for a loved one will avoid the unnecessary expense of a court application.

LPAs are a way for an adult to appoint someone who can make decisions about their finances, health and welfare should they be unable at some point to make them for themselves.  When making an LPA, an adult decides who’ll make decisions on their behalf – ie become their ‘attorney’ – and use their discretion and knowledge in that person’s best interests.   The nominated person could be a relative, friend, partner or a professional, such as a solicitor, and must be 18 or over with the mental capacity to make their own decisions.  Financial LPAs may be used as soon as they are registered, although some people may limit decisions to such a time as they lack the capacity to make decisions for themselves.     

To be valid, the LPA must be registered with the OPG, whose current guidance include stipulations that you must include an express power to allow your attorney to invest via a discretionary management service (DMF), where day-to-day management of investments is carried out by regulated professionals (such as ourselves). 

In the past financial LPAs often didn’t contain express provision – an agreement between two contracting parties – requiring the attorney to apply to the Court of Protection for authority.  However, following discussions with members of the Law Society’s Mental Health and Disability and Wills and Equity Committees, the OPG has conducted a review and has revised its position and changed its guidance. This now means an attorney can invest through a managed funds service offered  by DMF without the express permission of the court and saving unnecessary cost and bureaucracy.

At SGWM,  it is a key benefit of our services that we are one of a small number of regulated adviser companies that hold the Regulated Permissions required to offer discretionary investment management, often the preserve of stockbroker firms.  We manage our clients’ investments through well-diversified portfolios of collective investment funds where, in our view, the active management of asset allocation and selected investment funds offers real value.

Want to know more? Click here to get in touch