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Lenders support Bill to appoint guardians for borrowers who go missing


Published: 21 February 2017 | Author: Bernard Clarke

The CML is supporting the Guardianship (Missing Persons) Bill, due to be considered today by a committee of MPs. We welcome the Bill’s purpose in seeking to create a new form of legal guardianship that would allow the close relatives of missing people to continue to administer their financial affairs in their best interests until they are found.

The Bill would help lenders, who currently can be prevented by confidentiality rules and legal obligations from making pragmatic arrangements in a customer’s absence. 

If the Bill becomes law, it could create a form of guardianship with the potential to help ensure that, even in challenging circumstances, the customer’s interests are at the heart of any actions undertaken by financial firms.

Guardianship would be a new concept to staff working for lenders, many of whom are unlikely to be aware of the Bill’s progress. If the Bill becomes law, it would therefore be helpful for the government to provide a quick, clear and reliable means of verifying a guardian’s right to have information – and to make decisions – about a borrower’s property and financial matters.

This could be achieved by the office of the Public Guardian keeping a register of guardianship orders, similar to the register of Deputies appointed under the Mental Capacity Act 2005. It would also help if third parties, including lenders, could ask the guardian to see a guardianship order.

The extent of powers

An order could set out whether an appointed guardian has all – or only some – of the missing person’s rights and powers relating to property or financial affairs.

Lenders would also like to be confident that their own liability is limited if they are required to administer a mortgage on the instructions of a guardian. Clause 15 of the draft Bill indemnifies those who deal with a guardian in good faith because they – or the guardian – are genuinely unaware that a guardianship order is now no longer valid.

It is therefore helpful that the provisions of the Bill are based on equivalent provisions for Deputies appointed under the Mental Capacity Act. These would mean that a guardian is treated as the agent of the missing person, with authority conferred by a court order and the Bill. This would give third parties the same protection under law as they have when dealing with agents generally, like, for example, those acting as a power of attorney. 

Overall, the legislation, if enacted, would provide a welcome, practical way forward for lenders who want to help people who go missing and their families. The measures in the Bill provide re-assurance for all concerned, as they seek to manage financial affairs appropriately in what can be difficult circumstances.