Skip to content

Mental Capacity Act practice guidance

Part 26

People who lack capacity to manage their money

Code of Practice chapter 7; 8.31-8.37

People who lack capacity to manage their own money still need to buy goods and services. There is a risk of other people taking advantage of people who lack capacity and also a risk that people are not able to spend their own money on things that they would enjoy.

It is sensible for everyone to nominate someone who can manage their affairs if they lose capacity to do so themselves. If someone is in the early stages of a degenerative disease it is good practice to advise them to donate a Lasting Power of Attorney (Property and Affairs). (Part 19: Lasting Powers of Attorney) If someone does not have capacity to donate LPA then this arrangement can’t be made.

The Department of Work and Pensions can appoint someone to act as an appointee; to receive the person’s benefits. Policy at DWP about how these decisions are made is changing: sometimes they need evidence of the person’s lack of capacity and sometimes a Visiting Officer needs to see the person. If arrangements for receiving someone’s benefits need to be made, contact DWP and discuss the situation. There will need to be someone willing to act as appointee.

Direct Debit payments can be arranged to manage things such as utility bills. If the person can make such arrangements with assistance they should sign the necessary forms. If the person can’t manage this you will need to speak to the bank about someone else making these arrangements.

If the person who lacks capacity has savings or property, or if their financial situation is complex, it may be appropriate to apply to the Court of Protection to appoint a Property and Affairs Deputy. A Deputy can make all financial decisions for the person, including selling or managing property. A Deputy can be a family member or friend or the local authority. The local authority will only be appointed if there is no-one else or there are valid reasons why a family member should not be appointed as Deputy.

In Devon the Court of Protection Team will consider all referrals to take on this responsibility; there are no set criteria for accepting referrals and you will need to discuss the situation with a team member. In Torbay, contact the Client Proxy Finance Officer. (Contact details)

If it is clearly in the person’s best interests (as determined using the best interests checklist MCA section 4) to spend the person’s money this will be covered by s5. This means there is legal protection for the person who spends the money of the person who lacks capacity to make that decision, if it is clear that it is in the best interests of the person that their money should be spent in this way. (Code of Practice 6.58) (Part 8: Best interests decisions) (Part 12: Legal protection when applying MCA)

The Sale of Goods Act 1979 indicates that if someone who lacks capacity enters into a contract and the person providing the goods or services is aware that the person lacks capacity, the contract is not valid.

However, MCA section 7 modifies this. The person providing goods or services can claim a reasonable sum, regardless of the validity of the contract, if the goods or services are necessary. This means that it is appropriate to spend someone’s money on the things that they need. The Code of Practice explains that someone ‘needs’ whatever is appropriate to maintain their previous lifestyle. If someone has never been able to make their own decisions about how they spend their money it would be appropriate to spend their money on things to give them a lifestyle appropriate for an average person of their age, taking into consideration, for instance, the lifestyle choices of their family or friends. (Code of Practice 6.58)

Remember that Principle 4 MCA states that all decisions must be made in the best interests of the person who lacks capacity. This means that decisions about how someone’s money is spent cannot be led by the interests of their family. (Part 2: The Principles)

Be aware that people who lack capacity are vulnerable to financial abuse. If there are suspicions that someone is being abused make a referral to the Safeguarding Adults process. (Contact details)

The Money Advice Service offers advice to people who may be losing capacity or who care for someone who lacks capacity to manage their own money.