Residential care contracts – final guidance, legal action against Care UK and fee reviews

The Competition and Markets Authority (CMA) has published its final advice to help care homes understand their wider obligations to residents, and prospective residents, under consumer law.

The guidance makes clear how the CMA will decide whether care homes are treating residents and their representatives fairly and addresses many of the issues we have highlighted in our previous briefings (see the bottom of this article for links to these). The CMA has considered the wider process, where providers engage with potential residents and their representatives; from the point of first contact through to how the contractual relationship is managed and what happens when the residents move out or pass away.

The CMA and Trading Standards have a wide variety of powers available to them in situations where they believe that providers are in breach of consumer law. This includes bringing court proceedings to stop infringements, seeking compensation on behalf of residents and, in some cases, bringing criminal prosecutions. In addition, residents may be able to seek damages in the Courts and unfair terms will not be enforceable against them or their representatives.

We have already seen several providers come under scrutiny and agree variations to their contracts (in accordance with the CMA’s instructions):

• In January 2018, the Maria Mallaband Care Group dropped the use of a contract term which required residents to pay one month’s care fees following the death of a resident.
• In May 2018, Sunrise Senior Living agreed to pay out more than £2 million in compensation where residents had been charged an ‘upfront fee’, sometimes to the value of £3,000 per resident.
• This December 2018, Care UK has been asked to refund 1,600 residents the £3,000 (on average) ‘administration fee’ charged as a compulsory upfront fee, or face legal action.

The CMA continues to scrutinise contracts and take enforcement action. Whilst it is the Courts that ultimately decide whether consumer law has been breached, the guidance sets out the new regulatory landscape for consumer protection in the care sector and provides a clear explanation where investigative action will be taken, or prosecutions brought. Those providers who are in the process of communicating fee reviews to their residents should tread carefully and check whether their contract terms support the changes that are proposed.

We will be running a series of workshops in the new year which are designed to take delegates through the guidance, discuss whether the Courts might take a different approach to the CMA and to share examples of good practice when developing your customer contracts.

The full guidance and summary notes are available here.

For more information

If you would like further information regarding this e-briefing, or for any enquiries relating to residential care, please contact Emma Watt.

Previous residential care contracts e-briefings:

Residential care contracts – consumer rights and the cost of charging fees in advance

Residential care contracts – fees after death

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