The Public Trust Office, which has responsibility for pounds 1.45bn belonging to 22,000 people who suffer from mental incapacity, is to be rereviewed. Relatives are appointed as receivers for 19,500 of the patients, while the affairs of the rest are looked after by the trust office.
The National Audit Office found the agency failed to act when accounts prepared by relatives arrived late, left unacceptably long gaps between visits and levied administration fees that were too high. Most of the patients whose relatives failed to file accounts had no insurance against fraud. "We believe the absence of both accounts and insurance may put some patients' assets at particular risk...we believe there is insufficient information to judge the possible level of undetected abuse," the NAO report said.
Nine out of 10 accounts were submitted late. In one case, the NAO found that a patient's sister received pounds 2,600 to fund a holiday for him, herself and two other relatives even though her accounts were nine months late.
An 84-year-old paranoid schizophrenic who had an annual income of just pounds 4,000 was charged pounds 800 in fees.
Charities and MPs have been concerned about the agency for many years. The Commons Public Accounts Committee called for reforms in 1994 but the new NAO report found that few had been implemented.
Ginny Jenkins, director of Action on Elder Abuse, said her charity knew of a man suffering from alcoholic dementia whose daughter was given charge of his affairs. She was allowed to use the money to buy her father a part- share in a pub, losing pounds 20,000 in the process. His two sons did not even find out what had happened until it was too late. "The trust office are being notified that there are concerns. That results in people losing money to fraud," she said.
David Faber, Conservative MP for Westbury, has campaigned on the issue since being approached by a constituent whose father was placed in the care of a relative by the trust office without his knowledge. By the time he found out, money had gone missing.
The NAO made 27 separate recommendations for improvements, including closer monitoring of family receivers, sanctions for the late filing of accounts and improved arrangements for visiting patients.
It also said the agency should review its fees and make efforts to improve the performance of its investment programmes for patients' capital.
Geoff Hoon, Minister of State in the Lord Chancellor's department, said the review would look at alternative options for carrying out the work that the trust office did.