Guidance

Public Guardian practice note (SD15): OPG’s approach to surety bonds

Updated 23 June 2023

Applies to England and Wales

• Publication for Northern Ireland
• Publication for Scotland

1. Summary

The Office of the Public Guardian (OPG) supervises deputies appointed by the Court of Protection.

The court tells most deputies to get a ‘surety bond’ (also called a ‘security bond’). The bond is insurance that protect the assets of the person whose affairs and property the deputy is managing.

OPG has set up a scheme for surety bonds but deputies can get a bond from a provider that isn’t in the scheme.

The practice note explains what OPG expects from a bond provider, so that its surety bonds are suitable for deputies.

2. Introduction

The Mental Capacity Act 2005 (MCA) makes provision for ways in which decisions can be made on behalf of people when they may be incapable of making such decisions personally. In such cases, where the person, (referred to as “P”), has property or finances and no attorney in place it will be necessary to apply to the Court of Protection (the court) for an appropriate order.

Where the court makes a one off order or appoints a deputy to manage P’s property and affairs, it may require security be given by way of a surety bond for the protection of P’s assets. The court will decide the value of the surety bond.

The Public Guardian was created under the MCA on 1 October 2007. The Office of the Public Guardian (OPG) is an Executive Agency of the Ministry of Justice and supports the Public Guardian in the discharge of their duties. The Public Guardian has a number of statutory functions, which includes receiving security which the court requires a deputy or any other person to give. The Public Guardian can also apply to the court to enforce the bond where the deputy is in breach of duty.

The regulations that deal with security are:

The Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007 (as amended)

The legislation can be found on www.legislation.gov.uk.

3. The scheme

Regulation 34(4) allows the Public Guardian to make arrangements to facilitate the provision of bonds. The arrangement is commonly called “the scheme”. The scheme provides suitable surety bonds for the purposes of security to all deputies appointed by the court.

From 1 April 2023, the Scheme is administered by Howden Insurance Brokers Limited; Marsh Limited and Insync Insurance Solutions Ltd. Deputies are not required to enter into an arrangement within the Scheme and can seek their own arrangements.

Insync Insurance Solutions Ltd are currently not in a position to offer bonds and are working closely with OPG to establish earliest possible date for provision of  bonds.

4. The purpose of this document

This document sets out the Public Guardian’s expectations for any company seeking to provide bonds outside of the scheme. Providers need to demonstrate to deputies wishing to move outside the Scheme that they understand the unique nature of deputy bonds and meet the requirements of the Regulations. They must provide the requisite protection for P. OPG has no contract with any provider outside the scheme and does not provide any endorsement or promotion of products offered.

The order giving the authority to act as a deputy will not be released until the court and OPG are satisfied that appropriate security is in place. To ease this process OPG would expect to agree that the provider and product meet the requirements in the regulations and the Public Guardian’s expectations before it is in use. Otherwise the matter will have to be dealt with on a case-by-case basis, which may delay the appointment of a deputy.

OPG would expect to review regularly that a provider is meeting the requirements and the Public Guardian’s expectations, usually annually.

5. Expectations for providers

1. Providers will need to be able to endorse a bond as set out in regulation 34.
2. The Public Guardian expects bond providers to maintain full membership of British Insurers Brokers Association (BIBA) or successor or equivalent association.

6. Expectations for the bond

The security given by the bond is solely for the protection of P, and there is no protection for the deputy. These expectations provide assurance that the protection is robust and continuous throughout the deputyship. Bond providers should understand the following:

• the amount of security required is set by the court and cannot be varied by the bond provider or OPG
• neither OPG or the court are party to the bond, which is between the deputy and the bond provider
• once entered into, the bond cannot be cancelled by either party for any reason
• the bond can only be discharged by the court
• upon cessation of the deputyship the bond will lapse in line with the timescales in Regulation 37(3) as amended.
• to discharge a bond outside these timescales will require one of the parties to make an application to the court

7. Enforcement

Where a deputy fails in his or her duties, the bond can be enforced if required. Bond providers should understand the following:

• the court can call in all or part of the bond up to the limit secured. There is no requirement to prove fraud and the loss may not be quantifiable
• the court may order an interim payment, that is that part of the bond is called in pending quantification of the loss
• the Insurer must pay on demand without further investigation
• notification will be via a Court Order
• it is expected that Insurers will have the right to recover the amount they have paid out, plus their expenses, from the deputy. This is a matter for the insurer and in which the Public Guardian or court play no part

8. Deputies wishing to change provider

Where a deputy wishes to change bond provider, Regulation 35(3) provides that the Public Guardian must be satisfied that certain requirements have been met. Providers are expected to inform OPG of any deputies wishing to change providers.

The Public Guardian expects providers to ensure that deputies wishing to change provider understand whether the insurer will accept retrospective liability for any loss during the deputyship, no matter when it occurred. If retrospective liability is not accepted, the Public Guardian expects providers to make it clear that unless the previous bond is discharged, the deputy may be liable to pay premiums for both bonds.

9. Changes to the amount of security

Bond providers should understand the following:

The court can change the amount of security required at any time. This is most common where an application is made to increase the deputy’s access to funds. The Public Guardian considers it preferable, to ensure protection of P, that the wording of the bond ensures that the deputy accepts any increased security and premium without the need for further documents to be signed.

Should this not be the case, bond providers should ensure that a process is in place for notifying the Public Guardian where changes in security ordered by the court have not been effected.

10. Exchange of information

There are requirements for exchange of information within the regulations. OPG would look to agree an appropriate method of electronic transfer of information with providers who can meet the above expectations.

OPG would seek an information sharing agreement between the provider, the court and itself. The agreement would be expected to cover notification of a bond being put in place, the cessation of a deputyship, enforcement of bonds, and the format and layout of the information. It would also seek to agree timescales for transfer of information and to replying to information requests from OPG and the court.

11. Complaints

The Public Guardian expects bond providers to set out a clear complaint procedure, available on its website, which meets the requirements of both the Financial Services Authority and Financial Ombudsman Service.