Saturday 21 September 2019

Anger after wards of court funds lost cash

Families have criticised the Courts Service after funds for care suffered losses in the crash, writes Gavin McLoughlin

If a person is unable to manage their own affairs due to mental incapacity they can be made a ward of court. Stock photo
If a person is unable to manage their own affairs due to mental incapacity they can be made a ward of court. Stock photo
Gavin McLoughlin

Gavin McLoughlin

Wards of court are some of the most vulnerable people in Irish society. They are deemed by the High Court to be unable to manage their own affairs - be it through catastrophic injury, illness or some other cause - so the Courts Service comes in to fill the void.

A so-called 'committee' - often, but not always, containing a family member - is appointed to look after the ward's day-to-day affairs under the supervision of the Courts Service.

There are around 2,600 wards of court in Ireland, many of whom will have received court awards to facilitate their care for the rest of their lives. Responsibility for managing this money lies with the Courts Service.

Soon, the archaic term 'ward of court' will no longer be used, as all current wards will be discharged. A new system is being put in place under what is called the Assisted Decision Making Act, part of which is not yet in force. But for now the old system remains in operation.

Since the crash, a dispute has arisen between some wards' families and the Courts Service, regarding how the money was managed during the crash. Mary Farrell, a representative of the families' group (Justice for Wards of Court) appeared before the Oireachtas Justice Committee last week and called for a judicial inquiry.

"It is our contention that some wards have lost considerable amounts of money, that the investments did not meet their needs and were not fit for purpose. It is also our contention that the expertise required to make decisions on these investments and appropriate risk-avoidance strategies was not in place," Ms Farrell told the committee.

This alleged mismanagement is part of the reason why, in some cases, wards of court risk running out of money required for their care.

Examining this issue in 2015, the Public Accounts Committee reported that there was one ward of court who was set to run out of money in the next two years, two who had less than €10,000 and another 15 whose money was unlikely to prove sufficient to cover their lifetime needs.

This state of affairs was confirmed by Wards of Court registrar James Finn at the Justice Committee last week.

Documents seen by the Sunday Independent show steep falls in the value of a particular ward's funds as the financial crash hit in 2008. Losses were only realised when funds were drawn down - but this was unavoidable. Some funds had to be realised in order to pay for care. Compounding the difficulty was that families were not being sent statements of account on a regular basis, these were only provided on request.

The Justice For Wards group contends that when values started to drop some of the assets should have been moved to cash quickly in order to guard against losses. If families had been kept more in the loop via regular statements, it argues, this might have enabled them to intervene early and ask for a change. It also says that money that was lost should now be restored.

However, the Courts Service argues that it needed to take a higher risk with some investments in order to generate bigger returns and stop the money running out. Furthermore, it says, only a small number of cases saw losses realised and that small amounts of the funds were lost.

The families counter that while a sum may be deemed small in the overall scheme of things, every cent matters when it comes to looking after these vulnerable people.

Geraldine Hurley, head of the superior courts operations directorate at the Courts Service, told the Oireachtas Justice Committee that annual statements were now being sent out. Her colleague Sean Quigley, head of resource management and accountant of the Courts of Justice, acknowledged that more could have been done.

"We are accepting that we can do better and we are now starting that process of issuing statements. We have put our hands up to say we could and should have done better over the years.

"It was not that we were hiding anything but it was purely a resource constraint on our part in how to prioritise what we could do with the limited resources available to us," he said.

At issue in the dispute is one particular fund in which money was put - known as fund 4. None of this fund was invested in cash; instead, it had investments in bonds and European and international equities.

"In a minority of cases where losses were incurred, the amounts were quite small and have to be viewed in the longer term, which this fund was designed for," Mr Quigley said.

"The implication in some of the points raised by the Justice for Wards group is that wards of court funds, which have been invested in the growth fund, should not have been exposed to the type of fluctuations experienced by the growth fund.

"The alternative would have been to place the ward's fund in a fund made up of a combination of cash and bonds, perhaps with a much lower level of equity.

"If the money had gone into the less risky fund, we would have achieved 35pc (of a return)over the past 14 years, as opposed to 90pc (in the growth fund). That has to be a relevant factor as well. We have looked at a number of cases and if the money had been invested in the lower-risk and lower-return fund, the funds probably would have been depleted long ago.

"By placing the funds in the growth fund, the growth achieved has extended the purchasing power of those funds."

Mr Quigley said that a further factor to be taken into account was that court awards made many decades ago may not have been high enough to see some wards through to today.

Discussions are under way about having the Comptroller & Auditor General take a role in overseeing how the funds are managed.

Ms Farrell told the committee she backed this move, saying there should be public scrutiny and accountability relating to investment of funds.

Conan McKenna, an assistant secretary at the Department of Justice, said advice was being sought from the Attorney General about whether it would be constitutionally and legally permissible for the Comptroller to take on a role in this area. This would help reassure families about the kind of scrutiny that is in place.

He added: "Nobody is saying that what was suggested cannot be done, but we cannot move forward until we get a definitive view from the Attorney General as to whether it is possible.

"We expect that very soon."

Sunday Indo Business

Editor's Choice

Also in Irish News