Public Trust Office will disband after accounting flaws exposed

A Government office that looks after £1.45bn belonging to society's most vulnerable people is to be broken up after a Commons watchdog exposed serious flaws in its accounting.

A Government office that looks after £1.45bn belonging to society's most vulnerable people is to be broken up after a Commons watchdog exposed serious flaws in its accounting.

The Public Trust Office (PTO), whose clients suffer mental incapacity and cannot manage their money, left patients' assets at risk, according to two critical reports.

The National Audit Office (NAO) found earlier this year that the PTO was so badly run that its clients were ill-protected against fraud.

It has 22,000 people on its books; 19,500 have their money looked after by relatives who act as "receivers." The NAO said that the PTO had such a poor record at chasing up relatives who had failed to file proper accounts that it left some people at risk.

"We believe that the absence of both accounts and insurance may put some patients' assets at particular risk ... we believe that there is insufficient information to judge the possible level of undetected abuse," the NAO report said. Its findings were underlined by the Public Accounts Committee, which said there was a "catalogue of failure".

Yesterday the Lord Chancellor, Lord Irvine of Lairg, said improvements promised five years ago had not been made. He is now considering a report that says most of the office's functions should pass to the voluntary or the private sector with those that remain being carried out by the Official Solicitor's Office. The PTO also administers funds paid into court in advance of cases and deals with the wills of people who die intestate.

Lord Irvine said the Government must balance the need for speedy action with the need to maintain a stable service and a motivated staff. "But make changes we must. The public and, especially, the very vulnerable and their carers who need the services of the PTO, must be confident that they are provided as efficiently and effectively as possible," he said.

David Davis, chairman of the Public Accounts Committee, welcomed the decision. "The Lord Chancellor's Department ... have accepted our criticisms and have indicated their intention to take action to address the weaknesses identified. The interests of patients should be better protected in future," he said.

Charities and MPs have been concerned about the PTO for many years. The charity Action on Elder Abuse uncovered the case of a man who was 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 £20,000 in the process. His two sons did not find out what had happened until it was too late.

David Faber, the Conservative MP for Westbury, began campaigning on the issue after being approached by a constituent whose father's assets were placed in the care of a relative by the PTO without his knowledge. By the time that the son found out who was looking after the money, some of it had gone missing.