denotes premium content | Jan 8 2009 Feature
posted 13 Sep 2000 in Volume 5 Issue 6
New Fees
at the Public Trust office
“By Martin Terrell
One of the most
common complaints about the Public Trust Office has been the level of fees
charged to its clients. It has been a well founded criticism that a patient, who
has already lost control over his affairs has to pay for the privilege of having
his affairs monitored by the Public Trust Office. These costs must furthermore
be paid out of his taxed income. If the patient is even more unfortunate to lack
a friend or relative to act as his receiver then he must have the Public Trustee
take on this role. The cost of having the Public Trustee as receiver is even
higher and it is hardly a consolation to know that the cost would be even higher
but for the charges levied on patients with private receivers.
Historically, fees have
been levied by the Court of Protection and the Public Trust Office based on a
patient’s ability to pay them. Annual administration fees have been charged by
reference to a scale fee or a percentage of the patient’s income. The fees laid
down by the Court of Protection Rules 1994 (1) provided that a patient with a
clear annual income of between £10,000 and £15,000 would pay an annual fee of
£800. If income exceeded £15,000 then the fee would include 5% of the excess
over £15,000. Where the Public Trustee was acting as receiver the annual fee
based on the same income would be £3,000 plus 5% of the excess over
£15,000.
Concern
about the level of fees charged has been publicly acknowledged. In 1994 the
National Audit Office (2) accepted that receivers were dissatisfied with the
level of fees charged and that there was insufficient explanation about how and
why fees were charged. Receivers for instance saw the fees as merely a charge
for checking annual accounts rather than a way of meeting the cost of
administering and monitoring receiverships by the Public Trust Office. Fees were
reduced slightly as a result in 1994. The 1999 report of the National Audit
Office (3) did not so much criticise the level of fees being charged but rather
the fact that fees were not being properly assessed and that private
receiverships were subsidising Public Trustee receiverships. The report revealed
that in a survey of cases, 31% of private receivership fees were incorrectly
calculated. In financial terms the margin of error in a study of only 115 cases
was a staggering £1.3 million. The proportion of fees calculated incorrectly was
even higher for Public Trustee receiverships. At the same time, fees charged to
patients with private receivers were subsidising Public Trustee receiverships,
despite the significant difference in the fees charged. The level of subsidy
from private to public receiverships at over 30% was felt to be unacceptably
high.
As a
result, a new fee scale was introduced from 1st October 1999 by the Court of
Protection (Amendment) Rules 1999 (4). The 5% surcharge was abolished so that it
would at least be easier to calculate the correct fee. However the maximum level
of fees charged was increased significantly. A patient with an income of over
£25,000 a year would pay a fixed fee of £1,750 while a patient with the Public
Trustee as receiver would pay an impressive £4,600 a year.
The Court of Protection (Amendment)
Rules 2000 (5) which came into force on 1st September therefore represent a
radical attempt at providing a fair and transparent charging structure. There is
now a single annual administration fee charged on the first anniversary and
every subsequent anniversary of the appointment of a receiver. For private
receiverships the fee is now £205 and where the Public Trustee is receiver,
£1,750. This represents a significant reduction for most patients. A patient
with a clear annual income of over £5,000 is better off, although where the
Public Trustee is receiver, the patient’s income must exceed £7,000 for there to
be a saving. On this basis, patients at the lower end of the income scale will
in fact be worse off, although the Public Trust Office retains its discretion
under Rule 81 of the Court of Protection Rules 1994 to remit or reduce fees
‘where hardship might otherwise be caused’.
The new fee structure must also be
seen in the light of other changes being carried out to the role of the Public
Trust Office following the recommendations of the Quinquennial Review (6) and
Making Changes (7). Both these reviews for instance accept that patients with
capital of less than £10,000 should not be subject to the supervision of the
Public Trust Office. Thus the limit for short procedure orders was increased to
£10,000 and a review of all existing receiverships was implemented with a view
to reducing significantly the number of low value receiverships. A reduction in
the role of the Public Trust Office as receiver is also envisaged with this role
being taken on by private receivers in the private and voluntary sectors. The
aim of these changes is to reduce the cost of collecting and assessing fees and
to spread the cost of general monitoring and receivership among patients on a
unit cost basis. It is hoped that the Public Trust Office’s aim of freeing
resources to improve its core services to receivers will be successful.
The fee reductions
relate only to annual administration costs. The new Rules introduce a number of
increased fees, including some new fees, for individual transactions and
applications. The most significant increases are for the application for the
appointment of a receiver where the fee (which was £100 prior to October 1999)
goes up to £230 while the fee on an application for a statutory will goes up
from a modest £100 to a substantial £475. An application for an order or
direction ordering or authorising the sale of land which hitherto did not
attract a fee, now requires a set fee of £145.
The aim therefore is to provide that
those individual transactions which require more detailed scrutiny or the
involvement of the Court of Protection should bear their own costs rather than
be subsidised by the annual administration fee which reflects the cost of
routine administration and monitoring of receiverships. This is at least fairer
for routine and long-running receiverships which should not have to subsidise
those patients whose affairs are more complex and require the judicial
involvement of the Court of Protection.
The cost of making applications under
the Mental Health Act 1983 has therefore increased significantly. The increased
fee for making a statutory will which is payable on making the application and
not on the making of the order may act as a deterrent to a procedure which is
already expensive. An application for a statutory will usually involve costs of
one or more parties, in addition to the costs of the Official Solicitor as well
as a Court fee and a medical fee. On balance however, a sensible and transparent
fee for annual administration is to be welcomed and does seem to indicate that
the Public Trust Office is responding to the needs of patients and receivers.
Involving the Public Trust Office may no longer pose the dread that it has. How
many people are persuaded to make Enduring Powers of Attorney or to give control
of assets to other people for fear that the Public Trust Office will become
involved at vast expense?
This dilemma often arises where a person has some limited capacity but
cannot manage his or her property and affairs. Decisions may be made which would
be regretted with hindsight. If the Public Trust Office can be seen to be
relatively cost effective, it should be far more acceptable to the public as an
essential safeguard for those who are unable to manage their property and
affairs for themselves.
Martin Terrell, Rix & Kay
References
1 SI 1994
No 3046
2 National Audit Office: Looking After the Affairs of People with
Mental Incapacity, 39th Report of the Committee of Public Accounts Session
1993-94
3 National Audit Office: Protecting the Welfare of People with Mental
Incapacity, HC 206 Session 1998-99
4 SI 1999 No 2504
5 SI 2000 No
2025
6 The Public Trust Office of the Lord Chancellor’s Department: A
Quinquennial Review, Ann Chant November 1999
7 Making Changes: The Future of
the Public Trust Office, April 2000
The main fees, effective from 1st September can be summarised as
follows:
Commencement fee payable on the first
application for the appointment of a receiver or an originating
application (for example a short order or
direction). £230
Annual
administration fee payable on the first and every subsequent anniversary
of the appointment of a receiver until the termination of
proceedings
£205
Transaction fees payable in respect of
individual transactions:
(a) on any order or approval under an
order for the settlement or gift of property or carrying out of a
contract; approval of the variation of a trust under the Variation of
Trusts Act 1958 1/4% of the pecuniary consideration. But there is no
fee if the property is worth less than £50 and the maximum fee is
£500.
(b) the vesting of stock in curator appointed outside
England and
Wales £50
(c)
on an application for an order or the giving of approval in relation to
the exercise of powers as guardian or
trustee
£110
(d) on an application for an order for the
appointment of trustees under Section 36(9) of the Trustee Act 1925 or
Section 54 of the Trustee Act
1925
£110
(e) on an application for authorisation of a
person under Section 20 of the Trusts of Land and Appointment of Trustees
Act
1996
£110
(f) on the making of application for an order
authorising the execution of a statutory
will
£475
(g) on an application for the appointment of
a new
receiver
£175
(h) on an application for an order or
direction ordering or authorising the sale of
land
£145
on the death of the patient, a new fee is payable
of
£125
(a) on the appointment
of an officer of the court as a
receiver £250
(b)
an annual administration fee which replaces the scale fee which ranged
from £100 to
£4,600 £1,750
(c)
on the death of the patient and the winding up of the
receivership.
£1,015
