Dealing with dementia
To mark Mental Health Awareness Week, we explain the regulations and practices that govern how we deal with clients who are affected by dementia and other conditions that affect mental capacity.
Kevin Custis, Director, Rathbone Trust Company
More than 820,000 people in the UK have dementia and that figure is expected to rise to over a million by 2021. Alzheimer’s Research UK estimates that one in three people aged over 65 will die with some form of dementia – 163,000 new cases are diagnosed in England and Wales each year.
The latest forecasts from the Office for National Statistics suggest that as many as one in six people reaching 65 this year will live to 100. There are already 14,000 centenarians in the UK today and by 2037 there could be 10 times that number. However, while physical wellbeing has been extended dramatically, developments in mental health have lagged behind.
The prevalence of dementia increases as we grow older, so one of the consequences of an ageing population is that we will have to deal more often with the condition.
Some of us will at some stage lose the capacity to manage our affairs. We believe it is therefore important to share with clients our approach to this sensitive issue.
The 2005 Mental Capacity Act (MCA) gives a statutory framework for how to treat those who may have lost capacity, are starting to lose capacity or wish to make provision in case they do, including the conduct of their financial affairs.
While this legislation applies generally, there are other regulatory requirements that are not always in perfect harmony with it. For example, when managing investments and giving financial advice, we are bound by many laws and regulations overseen by the Financial Conduct Authority.
We are also under an obligation to treat customers fairly (and be seen to have processes and systems to do so). However, to treat clients with capacity issues fairly we may be required to act very differently from the way we would treat other clients. Given the wide range of conditions that can impair capacity and the varying degrees of incapacity that can result, this is a subject that deserves detailed consideration.
It is first necessary to establish a proper understanding of mental incapacity. According to the MCA, this is defined as:
“A person lacks capacity in relation to a matter if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain.”
Mental capacity therefore has two components. Firstly, it is time-specific and must be judged at the particular time when a decision has to be made. This is because the loss of capacity could be temporary, partial or fluctuating.
Secondly, the person’s decision is issue-specific, so the judgment on capacity must concentrate on the particular matter to which the decision relates rather than to any ability to make decisions generally. This means someone may not have the capacity to make a decision over one particular issue, but may be able to make others. This is particularly relevant where complex financial matters are concerned.
The Act also goes on to list certain principles to put these concepts into their practical context:
Every adult has the right to make his or her own decisions and must be assumed to have capacity to make them unless it is proved otherwise.
As we get older, many of us have occasional ‘off moments’ and some of us may be deemed eccentric. Thankfully the Act does not require Rathbones to impose judgments of normality.
A person must be given all reasonable help before anyone should treat them as not being able to make their own decisions.
This encourages us to be more involved with our clients, particularly in clarifying issues before decisions are made. We find it is often helpful to meet face-to-face if a complicated issue needs to be discussed
Just because an individual makes what might be seen as an unwise decision, they should not be treated as lacking capacity to make that decision.
Bad or even highly irrational decisions do not necessarily mean that capacity has been lost.
Anything done or any decision made on behalf of a person who lacks capacity must be in their best interests.
As discretionary investment managers, we make decisions on this basis anyway, but we must be even more mindful of this where a client has reduced capacity.
Anything done for or on behalf of a person who lacks capacity should be the least restrictive of their basic rights and freedoms.
We always have to be sensitive to the rights and freedoms of clients in this difficult situation.
Mental incapacity is clearly a difficult issue and we recognise the complexities surrounding it. Our clients can expect to be treated with sensitivity, patience and understanding if they suffer impairment of their mental capacity. Likewise, they and their loved ones can be reassured that we understand our responsibilities and will not shirk them for a quiet life. Where incapacity becomes an issue, we will face it and be guided by the MCA to act in the best interests of the client.
For more information on dementia and to support research into the condition visit www.alzheimers.org.uk
Dementia in the UK
820,000 people in the UK have dementia
1.7 million people in the UK will have dementia by 2050
1 in 3 people aged over 65 will die with a form of dementia
Over 80% of people in care homes have dementia or severe memory problems
£23 billion impact of dementia on the UK economy
£8 billion: amount that unpaid carers supporting someone with dementia save the economy a year
Source: Alzheimer’s Society
An investment manager’s perspective
Jane Sydenham, Investment Director, Rathbones
There is no shortage of legislation or regulations to protect clients with mental incapacity, but in practice this is an exceptionally difficult area. My approach is to address the subject long before it may be relevant by asking clients how they would wish me to deal with it. I usually advise speaking to a solicitor about establishing a lasting power of attorney.
This is a legal document, not unlike a will. It may cover either health and welfare or property and financial affairs – which is relevant here. People (‘attorneys’) are appointed by the person establishing the lasting power of attorney to make decisions on their behalf should they be unable. The attorney has a clear legal duty to act in the best interests of the person concerned. This is relevant not just to dementia but also to other situations of incapacity.
The best safeguard for clients is the relationships that we have with them. Rathbones does not use relationship managers: our investment managers have a direct relationship with their clients. These relationships are often longstanding and it is therefore relatively easy to spot unusual or erratic behaviour.
Where appropriate, I like to get to know a client’s partner and/or family (many of whom are also clients). This helps my investment decisions as I better understand the client’s circumstances and investment goals, but it can also help where a client appears to be losing their mental capacity. While respecting confidentiality, it can be beneficial to speak to a client’s loved ones to establish that all is well. Dementia is only one cause of unusual or uncharacteristic behaviour – medication, physical illness or anxiety can result in similar symptoms.
There are limits to what I can do. The law is clear – unless there are very obvious grounds for concern, clients are free to behave as they wish. This can be difficult where a client’s family feels they are making rash decisions, but ‘spending the children’s inheritance’ is not a sign of mental incapacity.