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Small Payments Consultation

Volume 703: debated on Tuesday 16 November 2021

Today I am launching a public consultation on proposals for a small payments scheme for individuals who lack mental capacity.

Many people think that being a parent, spouse, civil partner or sibling—more commonly referred to as being “next of kin”—means that if their loved one is unable to deal with their property and finances they will be able to step into their shoes and access their property and finances on their behalf.

However, it is a long-held legal principle that an adult must have proper legal authority to access or deal with property belonging to another adult. A common form of this legal authority is an ordinary power of attorney. The Mental Capacity Act 2005 established a new framework for the granting of legal authority in circumstances where an adult lacks mental capacity by allowing third parties to obtain legal authority through applications to the Court of Protection.

Since coming into force in 2007, the Mental Capacity Act has been a vital piece of legislation, protecting and supporting individuals lacking mental capacity and empowering families to prepare for the future, but we are aware that there is a lack of awareness of the Act, the protections it provides and the Court of Protection.

Where relatively small sums of money are involved, some families have said that the Court of Protection process is disproportionate and could have a detrimental effect in delaying, for example, the ability of a bank account holder to benefit from their funds.

This issue was initially brought to our attention by the families of children and young adults who lack the mental capacity to access their matured child trust funds when they turn 18. However, these issues will not just be faced by parents and carers of young adults, but by anyone who cares for someone who lacks mental capacity. There will be individuals who may require access to small amounts of money to support the specific needs of a person without mental capacity but may not feel a full deputyship order is appropriate for them or find the application process for a one-off order off-putting.

We believe an alternative to the Court of Protection process may be appropriate in some circumstances.

It is for this reason that the Ministry of Justice has been examining the case for a new process to enable third-party access to smaller balances without the need to obtain the form of legal authority currently required under the Mental Capacity Act.

We want any small payments scheme to be simple and quick, while also containing appropriate protections and safeguards for vulnerable individuals. It must not be seen as a replacement for obtaining the recognised legal authority as provided by either an LPA or an order of the Court of Protection, nor should it undermine the protections and support offered by the Mental Capacity Act. Rather, it should offer an interim solution while longer term arrangements are put in place where appropriate.

Creating a small payments scheme will require changes to the Mental Capacity Act 2005 and supporting secondary legislation. I have launched this consultation to invite views on the feasibility and desirability of such a scheme, and the potential changes to legislation.

To develop the proposals put forward in this consultation, we have engaged stakeholders from a range of sectors, including finance, legal, charity and social care. We now want to gather evidence from a much wider group and are asking for views on the following:

the purpose of the scheme;

the value and duration of payments;

the financial products in scope;

administrative arrangements for the scheme;

current barriers in the system; and

security measures and liability.

The consultation is available in full at: and a copy has been presented to Parliament.