It is the opinion of Business LPA that most, if not all business advisors, should be acutely aware of the issues that arise when the question of mental capacity has to be confronted.
First and foremost the Banking Code, advising all Banking Organisations, clearly states that in the instance of any person losing mental capacity, bank accounts to which the affected person is a signatory, should be ‘frozen’. It is our understanding that other signatories would no longer have access as well. This is well proven in the case of personal banking, even to the extent that a spouse can lose access to joint accounts when their partner is deemed to have lost mental capacity.
The significance to a business can be catastrophic as it will probably lead also to the withdrawal of overdraft facilities and the recalling of loans, the ‘lifeblood’ of most businesses.
The application for the only alternative, a Deputyship’ award by the Court of Protection, usually takes months, and there is a growing instance of businesses’ going under’ during that application period, with no practical banking facilities available. It is also a fairly expensive option which can fail. In some cases the Court may choose to appoint professional deputies. They would not necessarily work in the best interests of the business, just those of the donor.
It is also possibly that ‘others’ associated with the business, such as private investors and ‘sleeping partners’ might take actions to protect their own interests. This might lead to legal action on the basis that, in the case of a director of a limited company, he and or the other board members might be proven to have not conducted themselves in the best interests of the company, by not putting in place, in advance, this vital form of ‘insurance’.
From a business advisors own point of view, it is highly likely that any instructions regarding the ongoing management services and advice for which they receive remuneration, particularly on a continuous or periodically renewable basis, could well cease with the loss of mental capacity. The Mental Capacity Act 2005 is quite clear with regards to someone losing mental capacity and any subsequent decisions made by others on their behalf, who have not become an attorney, or received themselves instructions from an attorney, acting in the best interests of that person who has lost mental capacity. In short your own financial position can be affected.
Examples might include investments under the management of a financial advisor, or the variety of services undertaken by accountants and legal advisors.
In protected the best interests of both your client and yourself it, would appear good practice to advise your clients of this important issue, and perhaps even help them acquire the solution. It should be viewed as an essential insurance; but unlike the other forms of other, better known insurances, it is a one-off cost, chargeable to the business, and does not attract periodical renewal charges.
Obviously all professional business advisors should, themselves, get this ‘cover’, for the same reasons as their clients.
In these ‘early days’ of dealing with this comparatively new situation, we, at Business LPA, are creating a network of professional advisors, countrywide, to take our services to the business community.
We are set up to support the efforts of all professional advisors prepared to assist their clients in obtaining the solution. This in itself might be seen as a new source of income for many advisors prepared to develop their own understanding to a level whereby they can supply the solution themselves by representing Business LPA.
Equally we will recognise simple referral on a straightforward commission basis.
At Business LPA, we believe in protecting all parties in the delivery of this important insurance. With this in mind, we have developed a training programme for ‘Referring Business Advisors’ and ‘Affiliate Business Partners’. Knowledge of the legislation and the associated consequences and benefits of the product is an absolute. BusinessLPA is clear about the way it does business, and it’s important that all associates businesses understand our ‘code of practice’ and ensuring the product’s integrity is upheld at all times.
We can supply the training required and a proven process to support those advisors who wish to become involved, and are flexible in our working practices.
Business LPA was formed due to a shocking business need.
Speak to one of our advisors about the pitfalls and opportunities that could be relevant to you and your company.
Business LPA was formed due to a shocking business need.
Speak to one of our advisors about the pitfalls and opportunities that could be relevant to you and your company.