Notwithstanding plenty of excellent legal commentary on this judgment, it is fair to say it raises as many questions as it answers.

What do we know?

1. Direct Payments provided under the Care Act 2014, National Health Service Act 2006 and associated Regulations, are a mechanism for the statutory authority (Local Authority or NHS) to meet their statutory obligations in respect of the care needs of an individual.
2. It is a matter for the statutory authority to decide whether a Direct Payment is an appropriate way of meeting care needs and who is appropriate to be the authorised person or representative (AP) to receive and manage the Direct Payment where the individual (P) lacks capacity to manage the Direct Payment themselves.
3. The AP manages the Direct Payment on behalf of the statutory authority not P.
4. A Direct Payment does not become the property of the person receiving it – it does not form part of P’s assets.
5. A Deputy appointed by the Court of Protection, has no automatic entitlement or obligation to receive and manage the Direct Payment – their authority only extends to P’s assets.
6. A Deputy can be appointed by the statutory authority as an AP to receive and manage the Direct Payment. Separate approval from the Court of Protection is not required for this. They do not manage the Direct Payment as a Deputy but as an AP.
7. Where a Deputy is appointed as an AP and receives and manages a Direct Payment for a client, they have no authority to use P’s assets to pay for their costs of managing the Direct Payment – they are managing that payment on behalf of the statutory authority and not on behalf of P.
8. If a Deputy wants to use P’s assets to pay the costs they incur in receiving and managing the Direct Payment, prior authority from the Court of Protection is required.
9. A family member or a case manager might also be considered by the statutory authority as an AP to receive and manage the Direct Payment for P. But there is no obligation on them to take on that role.
10. Where Direct Payments are used to directly employ support workers and carers to meet P’s care needs, the AP takes on the role of employer as principal and not as an agent of P. This applies equally to Deputies, family members and case managers who are appointed as an AP.
11. Acting as a principal employer means the AP will have personal liability in respect of that role.  Any employment claims for instance would be against the AP and not against P.
12. Where a Deputy has received and managed a DP for P and charged them for doing so, they will either need to recover those costs from the statutory authority and reimburse P or apply to the Court of Protection for retrospective approval to use P’s funds to meet those costs.

This all sounds quite straight forward, so why is it creating significant challenges for Deputies and case managers?

What don’t we know?

1. Whether the Court of Protection will consider providing retrospective approval given the comments of HHJ Hilder in Lumb “A capacitous person receiving direct payments will not ordinarily incur fees for management of those monies.  As a starting point, it is therefore difficult to see why an incapacitous person should be expected to bear such costs.”
2. How the Court of Protection will approach the question of what costs and charges a professional Deputy will need approval for in the event they want to charge those to P. Could that include expenditure such as payroll, employer’s liability insurance, case manager charges for recruiting and managing the care team, employment advice, ENIC etc?
3. What approach will the Court of Protection take where there is a mixed package of funding (part public and part private). What element of the costs of managing that package of support can be charged to P without prior approval and what part requires approval?
4. Where a care team needs to be employed and part / all of that cost is met by the Direct Payment, can the Court of Protection approve the Deputy to take on the employer role as agent and not as principal?
5. Where a case manager is appointed as AR and receives and manages the Direct Payment, does a Deputy need approval from the Court of Protection to pay the costs the case manager incurs when acting in that capacity (recruiting, supervising care teams etc)?
6. What is the effective date for the purposes of calculating what costs retrospective approval is required for? Is this Lumb (October 2024), Calderdale (July 2021) or the date of the relevant Regulations?
7. What is the duty of a professional Deputy to seek retrospective approval where that relates to costs incurred by an earlier appointed professional Deputy and where approval isn’t provided, does this potentially become a claim under the security bond?
8. What is the position if P is now deceased but was charged by a Deputy for their costs of receiving and managing a Direct Payment – does their estate potentially need to be reimbursed in the absence of retrospective approval?
9. Where a professional Deputy agrees to continue to receive and manage Direct Payments but not to charge the cost of doing so to P (essentially not being paid for that element of their work), does that amount to a breach of Rule 3.3 of the Solicitors Accounts Rules – using the client account to provide banking facilities?
10. Where either a Deputy or a case manager is appointed as an AR and directly employs a carer as principal, does their professional indemnity insurance provide them with cover in the event of a claim?
11. Where a Deputy was managing a Direct Payment, employed carers and no longer wishes to continue in that role, will TUPE apply to the care team where their employment passes to the new AP?
12. Does this principle extend to those cases where a professional Attorney receives and manages a Direct Payment?

There will undoubtedly be many more questions!

Practically, professional Deputies and Attorneys will now need to:

1. Identify every case where they receive and manage Direct Payments (potentially including historical cases),
2. Consider whether they should open separate files to immediately track costs and charges incurred in relation to the management of the Direct Payment,
3. Calculate what costs have been incurred in receiving and managing the Direct Payments where those costs and charges have been met by P.
4. Decide whether they want to continue to receive and manage Direct Payments given implications in respect of their costs, acting as principal etc.
5. Work collaboratively with P, the family, case manager and statutory authority, consider next steps concerning any replacement AR, how the statutory authority should meet its obligations going forward, what is the position in relation to any directly employed care team etc.
6. Approach the statutory authority concerning payment of all relevant costs incurred to date.
7. Consider the position in respect of their PII where the Deputy wishes to continue to act as AP.
8. Consider what authority is required from the Court of Protection including retrospective approval for costs charged to P to date and prospective approval where the Deputy wishes to continue to act as AP and charge P for that service.
9. Advice in relation to employment contracts and TUPE may be required – Court approval will be necessary to charge that cost to P

Is this all just a storm in a teacup?
Approximately 1/3 of member firms of The Professional Deputies Forum responded to a recent survey considering the impact of Lumb. The results of the survey indicate that approximately 50 of its member firms currently receive and manage Direct Payments for in the region of 990 clients, 680 of whom they are appointed as professional Deputy for.

What does this mean?
If those professional Deputies have charged P for the costs of receiving and managing the Direct Payments and they do not already have authority from the Court of Protection to do so, they will need to make an application for retrospective approval.

Given the results of the survey represent only 1/3 of the member firms, that is likely to mean in excess of 700 applications will need to be made to the Court of Protection in the coming months.

The professional Deputy will also need to work very closely with P, the team supporting them and the statutory authority to ensure any decisions are made in the best interests of P and (hopefully) cause as little disruption to their package of care as possible.

What next?
The Professional Deputies Forum is working with the various stakeholders to consider whether a series of test cases would be an appropriate way of ensuring a consistent and managed approach, at least to the question of those cases where retrospective approval is required. We will update our members as soon as we have further information on this.

Stacey Bryant – Chair – Professional Deputies Forum