National care provider faces a potential multi-million pound liability in respect of consumer law breaches.
The Competition and Markets Authority (CMA) issued its final guidance on care contracts and consumer law obligations for care home providers in November last year. Since then, the CMA has taken legal action against certain care providers, for example, Care UK in respect of breaching consumer law.
More recently, in July this year, equipped with its recently acquired powers to directly intervene the CMA issued a letter before action to Barchester in relation to their “… (requirement of) substantial non-refundable upfront administration fees from residents…” and “…fees charged following a resident’s death…for a period longer than outlined in the CMA’s guidance.”*
Barchester stopped charging their upfront fees to residents in January 2019 (to reportedly around 12,000 residents) but the CMA was “…not provided with satisfied undertakings, including provision for financial redress for consumers in relation to the administration fee.”* and therefore issued their letter before action.
Potential Financial Impact
Barchester’s most recently filed accounts (2018) state that there is a financial impact of up to £12 million if the CMA successfully pursue them (the accounts also state that Barchester has taken specialist legal advice and believe that they are in a strong position to refute the CMA’s case).
Barchester are clearly acutely aware of the huge financial implications for the company, and its reputation, and have therefore taken advice.
We await further developments in this action and in particular details of the weight given by the courts to the CMA Guidance, which is non-statutory and not necessarily reflective of the commercial realities of providing care.
What does this mean for me and my business?
The CMA has been given muscles by the government to take direct action and is clearly not shying away from flexing them.
The CMA has stated that they will also be carrying out a market review of compliance with its care home guidance in the next few months (November 2019).
Now is the time to review your admissions processes, marketing materials and service user contracts to ensure that you are consumer law compliant and to avoid potential fines and legal action.
We are here to help you
We would encourage all providers to review their service user contracts, admissions and complaints documents to ensure that they are compliant with consumer law.
We have developed model documentation which complies with the CMA guidance whilst protecting your business. We can also provide you with bespoke advice and documentation. Please do get in touch.
If you are already facing compliance action by the CMA, demands for refunds from service users or relatives, or criticism by CQC, our healthcare dispute resolution team can help. We are experts in contentious matters relating to care contracts. We can help to limit the damage and preserve your reputation.
Whether you have had contact from the CMA or not, this is an issue that providers can no longer afford to ignore.
(*reference: quotes from CMA gov.uk website)