The Law Commission. s Recommendations
» Safeguards for the Financial Institutions
» Safeguards for the Person without Capacity » The
Scottish Scheme
» Response to Consultation in Who Decides?
» Comments on the Release of Payments Scheme
This Annex sets out the Law Commission. s recommendations and the Scottish scheme. It then sets out the Government. s position in the light of the responses to Who Decides?
1. In its 1995 Report, Mental Incapacity, the Law Commission set out details of a proposed Release of Payments scheme.
2. The aims of the scheme were:
to allow carers access to funds to deal with the day to day necessities required by the person without capacity they cared for, without continual recourse to the courts; and
to enable banks and building societies, insurance companies or other institutions to make arrangements with carers, once carers had demonstrated that the person in their care did not have capacity.
3. Under the scheme, banks, building societies, insurance companies and other fund holding institutions would be able to make limited contractual arrangements with a third party for withdrawals on behalf of the person without capacity. However, they would be obliged to check that the third party had provided certification from a medical practitioner that the person concerned did lack capacity before operating under the scheme.
Safeguards for the Financial Institutions
there would be no compulsion on companies or their depositors to participate in the scheme
where an institution released payments in accordance with the terms of the Scheme, then the institution would be protected from liability to its incapacitated customer for having done so.
The protection would not apply where:
the person without capacity had previously instructed the company not to enter into the scheme
the person without capacity had instructed the company not to make a particular payment once the scheme was in operation
there was reasonable cause to believe that the recipient of money under the scheme was likely to misapply it.
Safeguards for the Person without Capacity
4. When making a Release of Payments arrangement, the third party, often a carer, would have to:
provide a statement acknowledging their obligation to apply the money in the best interests of the person without capacity
confirm that they were aware that he or she would be subject to civil/criminal liability if money is misapplied
confirm that they were not aware of any other person with authority to receive the money.
5. In addition, such agreements
would be limited to £2000 per year for each recipient or each account
would not protect the company if the maximum amount was breached
would have a time limit of two years
could be overridden by a person acting under a Power of Attorney or similar.
Who Decides? accepted these recommendations in principle, but raised
concerns about the effectiveness of the proposed safeguards against abuse
of the scheme. Because of these concerns, views were also sought on the
merits of an alternative scheme, which is a modified version of that put
forward by the Scottish Law Commission. It is described more fully in Making the Right Moves. 
6. Under the Scottish scheme:
Carers would be able to:
apply to the Public Guardian (an officer of the Supreme Court) for authority for single payments, or a series of regular payments, from the bank account of the person without capacity, to be made to a specially designated account at the same bank
operate the designated account in the normal way, and could use it to withdraw cash or to make direct debit or standing order arrangements to meet daily living expenses.
The Public Guardian would:
authorise the amount and frequency of payments
monitor through spot checks and by investigating complaints that funds were used for the benefit of the person without capacity
be able to make enquiries about transactions on the designated account and on the account of the person without capacity
review the authority to withdraw regularly
investigate any problems or suspicious circumstances
be able to charge a fee.
The bank would:
be liable to the person without capacity for allowing payments over the limits set out in the Public Guardian. s authority.
7. Who Decides? sought views on the respective merits of these two schemes, and acknowledged the desirability of adopting a common approach in both jurisdictions. Those who responded to consultation on this issue generally supported a Release of Payments scheme.
8. However, the responses failed to clarify whether the scheme was really needed, or whether it would solve a major current problem for people without capacity and their carers. Respondents expressed concern about the lack of safeguards in the Law Commission. s proposals, but did not offer practical suggestions for safeguards that would be appropriate. There was some support for the alternative scheme proposed by the Scottish Law Commission.
9. The Government is concerned that if a scheme similar to the Scottish scheme were set up, it would need a central organisation to administer and monitor the scheme. This would be cumbersome and bureaucratic for carers and financial institutions in England and Wales, and would go directly against the Law Commission's intentions in proposing a Release of Payments Scheme which was intended to enable simple, informal arrangements to deal with day to day expenditure. There would also be substantial resource implications.
The Government needs to consider if the new system would justify the additional resources necessary. Do we need such a system, and would it really address the problems faced by people without capacity and their carers?
10. Following consultation in Who Decides?, the Government met with major voluntary groups, including Mencap, Age Concern, the Alzheimer. s Disease Society, and the Carers Association, and also with the Building Societies Association, in order to discuss the need for the Law Commission. s scheme. However, these meetings did not adequately clarify:
the extent of the difficulties that the Release of Payments scheme is intended to address
the extent to which these difficulties would be resolved by other elements in the Law Commission. s package, such as CPAs
how workable and unbureaucratic additional safeguards could be provided.
11. The groups we consulted expressed support for a statutory scheme which would have effective safeguards with no additional costs and no bureaucracy. It is not clear how this might be achieved.
12. As noted at paragraph 3 above, the safeguards proposed by the Law Commission included the need to provide a medical certificate confirming incapacity and a statement by the carer, which the financial institution could scrutinise and then monitor the carer. s actions under the scheme. In their responses to Who Decides?, banks and building societies have made clear that they would not be willing to undertake any such investigative or monitoring role, substantially reducing the effectiveness of these safeguards.
The Government is not at present convinced of the need for the Release of Payments scheme. We therefore invite further views on this issue, particularly from voluntary groups working on behalf of carers and people without capacity.
We would welcome views on:
the extent of current problems the type of workable safeguards that should be put in place, given
the potential problems inherent in the Law Commission safeguards and
the creation of a central authority on the Scottish model.
should be sent to:
Responses on the Release of Payments Scheme should be received by 25 February 2000.
Any request to treat all, or part, of a reply in confidence will of course be respected. If no such request is made it will be assumed that the reply is not intended to be confidential.