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Introduction
4.1 Carers looking after an adult with incapacity at home may need to pay for their food, clothing and household expenses. This can be difficult to organise and it is not always possible to make informal arrangements with banks, building societies or other organisations for withdrawals from the adult's account. Such arrangements may also be temporary, pending the appointment of a curator bonis by the court.
4.2 Many banks take the view that if one holder of a joint account loses the capacity to operate the account that has the effect of bringing to an end the holders' instructions to the bank. The bank will then freeze the account, requiring the appointment of a curator bonis to gain access to the funds. The appointment of a curator bonis is an expensive and elaborate process. While it is going on, the other account-holder will have no access to the jointly-held funds.
Policy objectives
4.3 Under our new statutory scheme, carers or other individuals will be able to submit an application to the Public Guardian, who will authorise payments for a time-limited period from an individual or organisation such as a bank or building society holding the funds of the adult with incapacity.
4.4 It will not be possible to make use of the withdrawal scheme where another person such as a continuing attorney, or a financial guardian, is appointed with powers over the account. The withdrawer will have to use the funds they receive for the account-holder's benefit. The Public Guardian will be able to carry out checks on individual withdrawers, requiring them to produce records and vouchers if necessary. The Public Guardian will also be able to investigate complaints about how withdrawers exercise their powers.
4.5 We shall provide that one holder of a joint account can continue to operate the account on the incapacity of the other, unless the account-holders have formally agreed to opt out of this arrangement.
Alternative arrangements
4.6 The Scottish Law Commission's investigations revealed an unmet need for simple, inexpensive ways of managing the financial and property affairs of adults with incapacity. Their proposals to allow cash withdrawals or to make payments from bank accounts were welcomed in principle by nearly all those who responded to their 1991 consultation paper. There were some concerns, however, about the potential for abuse. To safeguard against this, the Commission recommended that the Public Guardian should register and monitor such arrangements and the banks should also have a monitoring role.
4.7 We agree with the Scottish Law Commission that change is required and accept the principle of their withdrawal scheme.
Consultation
4.8 Detailed and constructive discussions have been held with the Committee of Scottish Clearing Bankers about the Scottish Law Commission's proposals. We have subsequently amended the proposals to take account of up-to-date banking practices and other practical matters. We believe that the revised scheme is a considerable improvement and offers both flexibility and appropriate safeguards.
4.9 The Scottish Law Commission recommended that a maximum weekly sum of £50 should be prescribed that could be withdrawn from the adult's account. An alternative approach was suggested in the 1997 consultation paper, that the Public Guardian should set an appropriate limit in each case. The Public Guardian would also determine the frequency of withdrawals. The majority of respondents agreed with the alternative proposal and we have adopted it.
4.10 Following discussion with the Scottish banks, we have amended the Scottish Law Commission scheme further. The Public Guardian will process applications for authority to make use of the adult's account for the adult's benefit. Such applications will need to state the amount required and the purposes for which it is required. The Public Guardian will issue a certificate, authorising the individual or organisation holding funds to make regular payments to a designated account, to be operated by the withdrawer.
4.11 The fund-holder's responsibility will be to ensure that authorised payments are made and the account is not overdrawn. The Public Guardian will have access to the fund-holder's and the withdrawer's records in order to carry out checks and confirm that the adult's funds are being used for the approved purposes. The withdrawer will be able to use the designated account in whatever way is most convenient, for example, through standing orders, direct debit, a cheque book or cash card, and will not be restricted to withdrawing cash.
4.12 The Scottish Law Commission also recommended that the withdrawer's authority should cease after a period of 2 years and a fresh application should then be required. This would place a burden on the withdrawer who would have to make a fresh application, accompanied by a new declaration of fitness. It would also impose a cost on the adult concerned.
4.13 The responses to the 1997 consultation paper were, on balance, that an authority to withdraw should generally cease after 3 rather than 2 years, at which point the withdrawer should have to make a fresh application to the Public Guardian. The Public Guardian would then be able to vary the period of authority, including making it indefinite. We shall follow this approach.
4.14 Our proposals for joint accounts appear to command general agreement, although no specific question about these was asked in the 1997 consultation paper.
4.15 We have broadened the provisions for both withdrawals and joint accounts to apply to any individual or organisation holding funds of an adult with incapacity. This is helpful in itself as it avoids having to specify which fund-holding bodies the scheme applies to. In its report, the Scottish Law Commission also envisaged that other bodies and organisations could hold funds on behalf of adults with incapacity.
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