It is the responsibility of the Public Guardian, under the Mental Capacity Act 2005, to ensure a person who does not have the capacity to manage their own financial affairs is protected from financial misappropriation. A Deputy has to be appointed when no Power of Attorney can be registered, meaning that the vulnerable person has not been able to legally state their chosen representative(s).

In order to help safeguard the interest of an individual who has lost capacity (“P”) Deputies are usually required by the Court to obtain “security”. The level of security is set by the Court and is subject to judicial independence. It can be based on a number of factors including the size of P’s estate and the extent to which the Deputy will have access to it. Most Deputies choose to fulfil this requirement by obtaining a Surety Bond.

A Surety Bond is an ‘on demand’ guarantee of the performance of a Deputy. The Bond safeguards the assets and estates of “P” from financial losses suffered by them as a result of the failure of the Deputy to perform the agreed duties expected by the Public Guardian. A Deputy will not be able to start acting for “P” until “security” is in place.

If, through the Deputy’s wrongdoing or misappropriation, “P’s” estate suffers a financial loss the Court may make a claim against the Bond. A claim payment is made by Insurers within 7 working days to ensure “P” is reimbursed for their financial loss. The Insurers have the right to recover the amount of the claim from the Deputy, including any additional costs, expenses or fees.

Once arranged, the Bond remains in force until discharged by the Court. The Deputy does not receive any protection from the Bond; its sole purpose is to protect “P”.