Lisa Webster: SIPPs and LPAs need careful handling

The Ministry of Justice recently launched a consultation on Modernising Lasting Powers of Attorney (LPA). Anyone who has been through the process of putting a LPA in place whether for themselves, family members, or clients, will know that modernisation is long overdue, so this consultation is very much welcomed. Since their introduction in 2007 the cost of registering a LPA has been cut several times, from £150 down to the current level of £82. This has successfully boosted uptake, but the current largely paper-based system is struggling to cope. In 2019/20 alone more than 920,000 LPAs were registered and every single one had to be printed out. The Office of Public Guardian (OPG) received 19 million sheets of paper in that year alone, and then had to post out a similar amount when these LPAs were registered. Apart from saving the forests, dragging the system into the 21st century also has the potential to save you and your clients a lot of time and energy. Changes proposed include replacing the need for witnesses with online verification, more powers for the OPG to carry out digital checks and LPAs being registered as soon as they are executed. All of this should lead to a more streamlined, efficient service, as well as providing increased safeguards, especially for donors. The publication of this consultation is also a welcome reminder of the importance of LPAs, and something that should be routinely discussed with clients. All too often people only think about attorneys once mental decline has set in – and then it can be too late. A donor must have mental capacity when they put a LPA in place. They have to be capable of making the important decision as to who they trust and want to look after their affairs – both financial and wellbeing. They also need to be able to give that attorney some instructions as to what their wishes are while they still can. For SIPP clients care is needed where they are co-trustees as LPAs cannot be used to delegate trustee powers. Although trustee powers can be delegated under a general power of attorney these can only last for a maximum of 12 months so are not a long-term solution. It may be possible to remove the member as a trustee, but how straightforward this will be will depend on whether the trust deed has an express power of removal. We tend to think that only the elderly need LPAs, but the sad fact is anyone can lose mental capacity at any age, so being prepared and putting an attorney in place just in case can make things a lot easier in difficult situations. If it’s left too late then things get a whole lot trickier and the process for appointing a Deputy under the Court of Protection is much more complex than getting a LPA. Inevitably there will always be those who do not think about putting an attorney in place until the first signs of mental decline appear. A speedier system may help more of them get through the process before it’s too late. Lisa Webster is senior technical consultant at AJ Bell. She is an economics graduate with over 15 years’ experience in financial services. Prior to joining AJ Bell in May 2014 she spent nine years working in senior technical and consultancy roles at a major SIPP and SSAS provider. She is part of the AJ Bell Technical Team, responsible for providing regulatory and technical analysis to the business and outside world. Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Twitter: @lisasippster

Lisa Webster: SIPPs and LPAs need careful handling

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