Investing rules for attorneys and deputies

If you hold a lasting power of attorney for someone's property and financial affairs, or you have been appointed a deputy by the Court of Protection, you can make investment decisions on their behalf. But the rules are tighter than for your own money. You must act in the person's best interests, keep their money separate from yours, and stay within the powers you have been given. You cannot delegate investment decisions to a fund manager unless the power of attorney document or court order specifically allows it¹.

The core duty is straightforward: an attorney has an obligation to act in the best interests of the donor and not to benefit themselves². A deputy can only act within the authority set out by the Court, and has a duty to act in good faith³. Everything else flows from those two principles.

This page explains what attorneys and deputies can and cannot do with investments, how to take advice, what records to keep, and where to get help if something goes wrong.

What attorneys and deputies can and cannot do with investments

A lasting power of attorney for property and financial affairs covers debts, mortgaged property and investments⁶. An enduring power of attorney covers decisions about finances or property and investments⁷. In practice, this means an attorney can buy and sell investments, move money between accounts, and manage an existing portfolio.

The limits matter as much as the powers. You do not delegate decisions to an investment fund manager unless you have permission within the LPA, EPA or court order¹. If the document is silent on delegation, you make the decisions yourself. A deputy faces the same restriction: they can only act within the authority set out by the Court, and they have a duty to act in good faith³.

There is also a distinction between types of deputy. There are two types: the property and financial affairs deputy and the personal welfare deputy³. Only the property and financial affairs deputy deals with investments.

For attorneys, the scope of decisions can include selling the person's home, paying their mortgage and bills, and arranging repairs². Investment decisions sit alongside those responsibilities, not above them. If the person needs cash for care fees, that may take priority over keeping money invested.

Acting in the person's best interests

Best interests is the test that runs through every decision. As an attorney, you have an obligation to act in the best interests of the donor and not to benefit yourself². Attorneys appointed under an LPA must act in the best interests of the individual⁸.

What does that mean for investments? It means considering the person's circumstances, their income needs, their care costs, their attitude to risk before they lost capacity, and any instructions they left in the document. It does not mean chasing the highest return. It does not mean putting money into something you would choose for yourself.

The Financial Ombudsman Service has considered cases where a bank failed to explain investment options properly. In one case study, compensation was awarded after a bank failed to fully explain investment options⁹. The ombudsman looks at whether the consumer wanted capital protection, their investment objective, attitude to risk, affordability, and where the investments were made¹⁰.

For attorneys and deputies, the same principles apply. If you are making an investment decision for someone else, you need to be able to show that you considered their needs and circumstances, not just the product's potential return.

Attorneys: following the lasting power of attorney

The lasting power of attorney is the document that defines your powers. You can appoint as many attorneys as you like, and replacement attorneys⁸. If more than one attorney is appointed, the document may say whether they must act jointly or can act separately.

An LPA for property and financial affairs can be used at any time after registration⁴. You decide when you want this type of LPA to start; the attorney must have your permission to act while you still have mental capacity⁸. This is different from an enduring power of attorney, which an attorney can use while the donor still has mental capacity even if it is not registered⁷.

Registration is not optional for an LPA. An LPA must be registered with the Office of the Public Guardian before it can be used⁴. Either the donor or the attorney can register it¹¹. The forms must be signed in a particular order: donor first (witnessed), then certificate provider, then attorney (witnessed); otherwise the LPA will be rejected⁸.

For an EPA, the rules differ. If the donor loses mental capacity, the attorney must register the EPA to start or continue using it¹². The attorney registers it with the Office of the Public Guardian when they think the donor is beginning to become unwell or already lacks capacity to manage their own finances¹¹.

Once registered, an attorney must involve the donor in making decisions wherever possible, only make decisions the donor cannot make themselves, and follow any instructions in the EPA¹².

Deputies: the limits set by the Court of Protection order

A deputy is appointed by the Court of Protection, not by the person themselves. If someone does not have mental capacity, the Court of Protection could give you the right to make decisions for them, and could make you a Deputy¹³. The application process involves the Court considering whether it is necessary for ongoing decisions to be made on their behalf, and whether the person applying is suitable³.

The key difference from an attorney is that a deputy's powers are set out in the court order, not in a document the person signed. A deputy can only act within the authority set out by the Court, and they have a duty to act in good faith³. If the order does not mention investments, the deputy does not have investment powers.

There are two types of deputy: the property and financial affairs deputy and the personal welfare deputy³. Only the property and financial affairs deputy can make investment decisions.

If money is held in the Court Funds Office or is administered by a Deputy appointed by a Court, it is administered by a Court¹⁴. This means additional oversight applies.

A deputy who wants to invest beyond what the order allows must apply to the Court of Protection for permission. The Court will consider whether the proposed investment is in the person's best interests.

Taking financial advice before investing

There is no general rule that an attorney or deputy must use a financial adviser. But some products require advice. Before purchasing an equity release product, professional financial advice is required, and the adviser must be qualified¹⁵.

If you do use an adviser, the adviser has duties too. A firm must ensure all advice given and action taken has regard to the best interests of the customer, is appropriate to the individual circumstances of the customer, and is based on a sufficiently full assessment of the financial circumstances of the customer¹⁶. Both independent financial advisers and restricted financial advisers must agree up front how much you will be charged for their services, when you will be charged and how payments will be made to them¹⁷.

Finding an adviser can be done by searching online, checking specialist investment publications, talking to your accountant or solicitor, checking the investment pages in major newspapers, or contacting trade bodies¹⁸.

Before investing, make sure you have some "rainy day" money. Keep an appropriate amount of cash in a bank or building society so you can access it quickly for any unexpected outgoings or emergencies¹⁹. For someone else's money, the same principle applies: their immediate needs come before investment growth.

Keeping the person's money separate from your own

Attorneys must respect confidentiality, follow the donor's instructions and preferences, and keep their money and property separate from their own². This is not optional. Mixing the person's money with yours is a breach of duty.

The principle applies to investments as well as bank accounts. If you buy investments for the person, they should be held in their name or in trust for them, not in your name. Some products allow investment in trust for someone else²⁰. Others allow investment in your own name or jointly with one other person, but that is for your own money²¹.

Keeping savings separate can make it easier to see growth and reduce the temptation to spend²². For someone else's money, separation also makes it easier to show what you have done if questions are asked.

The same safeguarding principle applies in other financial contexts. Money transfer firms must separate client funds from their business funds²³. E-money and payment services providers must hold funds separately from the firm's own funds, typically with a bank²⁴. Individual Savings Accounts and Child Trust Funds legislation provides additional safeguards for investors²⁵. The principle is consistent: client money is not the firm's money, and the person's money is not the attorney's money.

Records, reports and supervision by the Office of the Public Guardian

Attorneys should record important decisions and when they make them, and the donor's assets, income and how they spend their money². This record serves two purposes: it helps you make consistent decisions, and it provides evidence if your actions are questioned.

The Office of the Public Guardian has a responsibility to investigate allegations of mistreatment or fraud, and can report concerns to the police or social services if necessary⁸. The relevant authorities can request information about how you use power of attorney and check your decisions². They may arrange a visit or contact people who know the donor².

For enduring powers of attorney, there are specific retention rules. Do not send the unregistered EPA and deed of revocation to the Office of the Public Guardian; you need to keep them¹². Enduring Powers of Attorney do not need to be registered with the Office of the Public Guardian before use, but they must be registered once the donor lacks capacity²⁶.

An LPA must be registered with the Office of the Public Guardian before it can be used⁴. This is done through the Office of the Public Guardian¹¹.

If you are concerned about how someone is managing another person's money, Age UK's guide covers getting help with managing money, shopping and banking safely, sorting legal affairs, spotting financial abuse and what to do if you think someone is taking advantage of you²⁷.

If something goes wrong: concerns, complaints and getting help

If you think an attorney or deputy is misusing someone's money, the Office of the Public Guardian has a responsibility to investigate allegations of mistreatment or fraud⁸. They can report concerns to the police or social services if necessary⁸.

The Financial Ombudsman Service can consider complaints about power of attorney²⁸. If you have lost money because you received the wrong investments advice, the ombudsman will tell the firm involved to put things right and pay compensation for distress or inconvenience¹⁰. The ombudsman looks at whether the consumer wanted capital protection, their investment objective, attitude to risk, affordability, and where the investments were made¹⁰.

If you pay for regulated financial advice and it turns out to be poor, including if you lose money as a result of bad advice, you can complain and ask for compensation²⁹. But you will not be compensated for investments falling in value, or a company in which you hold shares going bust, unless this resulted from bad advice by a regulated Independent Financial Adviser that has since gone bust¹⁵.

The Financial Ombudsman Service decides complaints using relevant law and regulations, regulator's rules, guidance and standards, industry codes of practice and good industry practice at the time of the event³⁰.

If you are concerned for your safety, contact the police for information and support³¹.