A highly anticipated judgment on the appointment of investment managers which have financial relationships with Deputies was handed down by The Court of Protection on 19 March 2024. 

In the case of Irwin Mitchell Trust Corporation v PW (by her Litigation Frind, the Official Solicitor) and The Public Guardian [2024] EWCOP 16, Her Honour Judge Hilder ruled that Deputies appointing connected investment managers is a conflict of interest, a decision which will have wider implications for the industry. 

The key question in this case was whether there was a conflict of interest in the Property & Affairs Deputy (Irwin Mitchell Trust Corporation) appointing Irwin Mitchell Asset Management (“IMAM”) to manage the investment of PW’s funds and whether continuing that appointment was in PW’s best interests. 

The Deputy argued that there was no conflict as there were robust process in place for the appointment of IMAM including maintaining a panel of investment advisors and a “beauty parade” of three or four panel firms, including IMAM, being invited to take part. The Deputy stated that a score card was used to assess the proposals from each firm. 

The Court of Protection did not accept this argument and ruled that in appointing IMAM, there was a conflict between the Deputy’s fiduciary duty to PW and their own financial interest in PW appointing IMAM. 

The next issue for consideration by the court was whether, having identified there was a conflict of interest, the appointment of IMAM could be ratified. This was not determined as the judge found there was insufficient evidence before her to be satisfied that the appointment of IMAM was in PW’s best interests. The parties were invited to attempt to reach agreement in light of this judgment if IMTC intends to pursue its application for ratification of the appointment on IMAM. It is unclear at this time whether they do intend to pursue this. 

Key issues arising from this judgment: 

• There is a conflict of interest where the Deputy appoints an investment manager with a financial connection to the Deputy. 
• This conflict cannot be negated by a “beauty parade”. 
• Court approval will be necessary if the Deputy wants to appoint an in house or connected investment manager. 

If in-house or connected investment managers are already appointed, it remains unclear if these appointments will be ratified by the court and whether any investment fees paid to these in-house investment managers will need to be refunded to claimants given the potential unfairness in their appointments.