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Mental Capacity Act: consultation launched on Small Payments Scheme

The Ministry of Justice has launched a consultation seeking views on potential changes to accessing limited funds belonging to an individual who lacks mental capacity without a Lasting Power of Attorney or Court of Protection order.

It is a long-held legal principle that an adult must have proper legal authority to access or deal with property belonging to another adult. Where an adult has mental capacity, this legal authority can be provided by an ordinary power of attorney. Where the adult lacks mental capacity the Mental Capacity Act 2005 (MCA) provides the framework for them to grant legal authority by a lasting power of attorney while they still have mental capacity, or for third parties to obtain legal authority through applications to the Court of Protection.

Concerns have been raised with the Ministry of Justice regarding the length and the complexity of the Court of Protection process when trying to access small balances. Some consider the process disproportionate and overly-burdensome where there are limited sums of money involved. Further investigation has revealed that there may be some individuals who require access to small amounts of money to support the specific needs of a person without mental capacity but may feel a Court of Protection order is not appropriate or find the application process for a one-off order off-putting, too complex or disproportionate to the amounts of funds involved.

In light of this the Ministry of Justice has been examining the case for legislation to enable third-party access to limited funds without the need to?obtain the form of legal authority currently required under the Mental Capacity Act.

Under the proposals:

• Payments or withdrawals would be up to a total value of £2,500 over a six month period, with the possibility of a single extension if the full value of the account had not been withdrawn.

• An applicant would have to prove their suitability to access the fund on behalf of the individual, rather than it being limited to only family members – for example, a guardian.

• Once the maximum £2,500 has been withdrawn from an account no further withdrawals would be permitted.

• The scheme would be run by financial services firms, such as banks or building societies.

• In cases where longer term management of accounts was needed, families and guardians would be encouraged to consider a deputyship and to apply to the Court of Protection if necessary.

The consultation closes on 12 January 2022.

For the consultation document, click here.