Posted by James Sage, Partner
Care home providers watch out: consumer watchdog raises concerns
At the end of last year, the Competition and Markets Authority (CMA) began a formal market study into care homes for the elderly, to review how well the market works and if people are treated fairly. The study is focused on four key areas: choice of home, regulation of the sector, competition between providers and consumer protection issues.
At the mid point of its investigation, the CMA has released an initial report and announced that a formal consumer protection case has been launched to investigate its key concerns. The headline conclusion is that some care providers may be breaking consumer law. A summary of the findings can be found here and the full report here.
The initial report has highlighted two particular areas for providers to consider, unfair contracts and lack of online information.
The investigation has raised concerns about unfair terms and practices, including:
• relatives being charged fees for extended periods after a resident has died
• large upfront fees and deposits being charged, which are not properly explained and not appropriately protected in the event the provider becomes insolvent
• unfair termination provisions
• failure to include appropriate systems and safeguards around capacity to ensure that the contract is entered into in a way that protects the provider from non-payment and upholds consumer legislation
• hidden charges
• lack of transparency around payment of top-up fees and treatment of funded nursing care contribution.
These findings match our Health & Social Care team’s experience of the likely contract challenges. For example, following the recent increase in the funded nursing care contribution, some service users expected their private contribution to be reduced and were unhappy that they did not benefit from the change. We have found that very few contracts address this correctly.
With the publicity generated by this study, you may find that your contracts are challenged more frequently and need to be reviewed and amended in order to stand up to the test.
Lack of online information
Another issue uncovered by the investigation is a lack of transparency on prices, terms and availability on provider websites, which makes the search process longer and more difficult than it should be. The CMA states that this can be easily remedied by including these details on the website, but does not appear to consider obvious concerns about disclosing such commercially sensitive information to competitors.
It is clear that the CMA’s investigation is likely to lead to a clamp down on consumer practices within the sector. We would encourage all providers to review their contracts, admission procedures, internal protocols and the information published on their websites.
Our Health & Social Care team will keep you updated as the CMA’s investigation progresses.
We offer a free review of service user contracts and admissions letters. If you would like to take advantage of this offer, please get in touch with James Sage or another member of our specialist Health & Social Care team:
0800 051 8058 Email us
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