Amendment 16

Part of Financial Services Bill - Report (2nd Day) – in the House of Lords at 5:15 pm on 14th April 2021.

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Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords) 5:15 pm, 14th April 2021

My Lords, I will speak to Amendment 37C in this group. I declare that I chair the National Mental Capacity Forum. I hold the noble Lords, Lord Young of Cookham and Lord Blunkett, in the highest esteem, and I am most grateful to the noble Lord, Lord Young, for the time he spent talking through my reservations about this amendment as drafted.

The discussions relating to child trust funds have come about through the best of motives: trying to ensure that money can be accessed easily when a fund matures if the person for whom the fund was established lacks the mental capacity to access it and manage their money. Around 55,000 funds matured monthly since last September. To date, about 7,000 of these are held by young adults aged 18 who lack mental capacity. Some 80% of these funds are for amounts of under £2,000. The Court of Protection processes may seem daunting to many parents and so, in trying to resolve this, a process has been developed by some but not all providers.

As the noble Lord, Lord Young, said, the amendment is modelled on the 1997 Law Commission report that was behind the original Mental Incapacity Bill—a Bill which did not proceed. That report suggested a small payment scheme, which was not progressed because there were concerns that it could be stretched more widely to cover other financial products and that it would not respect the requirement that there should be proper judicial authority to act on behalf of another person in handling their affairs if they have not been able to designate that authority themselves.

Following the important work of noble Lords on child trust funds, the Court of Protection has been looking at its rules processes and is due to meet shortly, on 20 April, to explore ways to simplify the application forms. It is important to note that the application fee has already been waived and that any form marked for urgent business goes before the urgent business judge on the same day. There is no need for a solicitor to be involved, and there have been seven applicants to date whose applications have gone through successfully without using a solicitor, so there is no need for any costs for the applicant, nor should there be delays. I hope that the noble Baroness, Lady Altmann, will assist Mikey’s parents to apply under the urgent provision, as it should be processed very rapidly as he is terminally ill.

However, there is a fundamental principle here. One person cannot access another adult’s money or possessions without their permission, or, if the person lacks capacity, can access funds only with legal authority. Although this money is called a child trust fund it is not accessible to the person until they turn 18—in other words, when they become in law an adult. That means that we are talking about somebody else accessing an adult’s money. The role of the Court of Protection is to ensure that the money accessed is limited to this fund and possibly other clearly identified funds that are the property of the 18 year-old, and to guard against misappropriation of the money.

Let us take the case of a child who has been hit by a car and sustained catastrophic head injuries. On turning 18, the trust fund money is there and there may also be a settlement for very large sums in compensation to provide for their future care. I do not see how this amendment, as drafted, would prevent larger sums than the trust fund being drawn in, and therefore how it could prevent larger sums of money being misappropriated and used by others for purposes other than the care of the person. The amendment would not restrict who can apply for this money as it does not specify that only parents or responsible carers can apply under the proposed scheme. Could cousins, siblings or others who pretend to have the person’s interests at heart access money?

Another difficulty is what happens if the person later regains some capacity. Take, for example, a person with a catastrophic head injury acquired at the age of 16 and who, with rehabilitation, may have regained enough mental capacity by the time they are 20 or 21 to be able to be involved in their own financial decisions, particularly over smaller sums of money.

Sadly, these instances that we have heard about and that have received press coverage should never have happened in the first place. In my role as chair of the National Mental Capacity Forum I have been working to raise issues around transition, highlighting the need for planning to happen when a young person is in their mid-teens, so that when they have reached the legal age of majority at 18, everything is in place to allow future decision-making to happen, with the oversight of the Court of Protection through a court-appointed deputy.

This amendment would affect Scotland and Northern Ireland, as well as England and Wales. Therefore, I wonder what discussions have happened with the devolved Governments over this amendment. Across the UK, young people, on turning 18, rightfully have access to their trust fund, currently under judicial oversight it they lack capacity.

At first sight, this amendment might seem to solve a problem and the sentiment behind it is commendable, but I am concerned that the principle of needing legal authority to access a person’s funds—a principle that was in place before the 2005 Mental Capacity Act and has not been eroded by it—should remain intact. This amendment is not supported by the Building Societies Association, UK Finance or the bank and building society child trust fund providers, which are represented in the child trust funds working group. The fast-track urgent process is in the Court of Protection and now, with no fee attached, it would seem a much safer way to manage these funds rather than to risk misappropriation.

I hope that the exceptional process suggested by some providers will be shared with the Court of Protection, so that their revised forms will inform revision of the Court of Protection forms to make them more user-friendly. We all hope that this is resolved with alacrity. Importantly, parents providing long-term care for their child or children with severe learning difficulties and other problems of capacity need to make long-term provision through a court-appointed deputyship or, if the person at 18 has adequate capacity, through being appointed with a relevant lasting power of attorney.

I fully accept that there is more work to do to prepare parents and young people for the transition to legal adulthood at the age of 18, but this amendment does not solve this problem of a failure of planning. Therefore, regretfully, I cannot support it.