Consultation on a Small Payments Scheme for the Mental Capacity Act 2005

Tuesday 28th February 2023 Written Statements

[The Parliamentary Under-Secretary of State for Justice (Mike Freer)]

Today I am publishing the Government’s response to the consultation on a small payments scheme for the Mental Capacity Act 2005.

The Mental Capacity Act (MCA) is a crucial piece of legislation that protects vulnerable individuals who may be unable to make decisions for themselves. The principles of the MCA guide us in empowering these individuals to make their own decisions when possible and supports their families and carers to make decisions in their best interest when necessary.

It is a long-held principle that an adult must have proper legal authority to access or deal with property belonging to another adult. In cases where the adult lacks mental capacity, the MCA provides the framework for them to grant legal authority by appointing a lasting power of attorney (LPA) while they still have mental capacity, or for third parties to obtain legal authority through applications to the Court of Protection (CoP).

Concerns have been raised that the existing CoP process for obtaining legal authority to access accounts on behalf of individuals who lack mental capacity creates barriers to access small value assets. This has particularly been highlighted in the case of accessing matured Child Trusts Funds, where a campaign by the families of young adults with learning disabilities has led to attention in both the Lords and Commons.

In response to these concerns, the Government decided to examine whether there was a case for an alternative process to the current CoP deputyship where access to small funds was required. We consulted on a small payment scheme that would be run by financial services firms and permit access for six months to limited funds up to £2,500 from one account belonging to an individual who lacks mental capacity without an order from the CoP being sought. The scheme set out to meet three aims:

Scope: Scheme must be broad enough to be useful and avoid inadvertent discrimination;

Security: Assets of vulnerable individuals should not be subject to unacceptable financial risk; and

Simplicity: The scheme must be straightforward and allow quicker access to limited funds than current processes, while being easy for financial service firms to implement.

The consultation received 225 responses and provided the opportunity for key stakeholders from the financial, legal and disability sectors as well as parents and carers supporting those who lack mental capacity to share their concerns about the current system and opinions on the new proposal.

The consultation provided clear evidence of the challenges faced in the current system. Most consistently respondents complained of the lengthy and complex CoP application forms, and the time taken to complete the application. It has also become apparent through the consultation that there is a general lack of awareness of the MCA. In many cases families and carers are often caught off guard when their child turns 18 as they were not aware of the MCA and the need to obtain legal authority to manage another person’s financial affairs if they lack capacity.

I want to make it simpler and quicker for the people who care for individuals who lack mental capacity to access the funds on their behalf. The evidence demonstrates that legislating for a small payments scheme would fail to address the underlying challenges preventing access to small value assets. Instead, the best approach is to focus on addressing the underlying barriers in the current system to accessing small value assets. To do this, the Government will work with the Court of Protection to improve application processing times and simplify court forms, and collaborate with OGDs, charities, and the finance sector to increase awareness of the MCA among parents and caregivers of young people without capacity as they transition to adulthood.

Importantly, this approach will also maintain protections and support for vulnerable people and their rights. The steps outlined uphold the principles of the MCA to empower individuals without mental capacity to make their own property and affairs decisions when possible and support their families and caregivers to make decisions in their best interest when necessary. This is essential for protecting vulnerable individuals from fraud, abuse, and coercion.

I hope the publication of this response will demonstrate the thorough consideration given to this issue and the impact on those individuals who lack capacity. As my predecessor, now the Minister for Disabled People, Health and Work, my hon. Friend the Member for Corby (Tom Pursglove), said when launching the consultation, these individuals must come first and should not lose the protections provided by the MCA. It is my belief that this response rightly honours that.

[HCWS588]