Posted by Hazel Phillips, Partner
National care home group facing legal action from the CMA
The CMA have contacted Care UK and stated that they must refund residents who were charged an upfront reported “admin” fee to avoid facing legal action.
The Competition and Markets Authority (CMA) published a report in 2017 highlighting concerns about service user contracts breaching consumer law, and recommended wholesale changes to admissions processes, complaints handling and service user contracts. After consultation, the CMA issued its final guidance on care contracts and consumer law obligations for care home providers on 18 November 2018.
In the final guidance, the CMA made it clear that they will be working closely with Trading Standards Services and sector regulators to hold care homes to account and may decide to take enforcement action.
What measures is the CMA taking?
Care UK were charging a compulsory upfront fee of up to a reported £3,000* to residents as an “administration” fee. The CMA has recently intervened, and Care UK has ceased making these charges. However, the CMA is still threatening legal action as they believe that this compulsory, non-refundable fee was not for specific services or products for residents on admission to a home. The CMA also believes that the description of the fee wasn’t sufficiently clear and was therefore misleading residents in their journey to admission at a care home.
The CMA have made it clear to Care UK that unless it makes full refunds to the affected residents (reportedly over 1,600 residents*), it will take legal action against Care UK. The CMA has given Care UK until 10 January 2019 to respond. Care UK have said that they will defend themselves.
(*figures taken from the gov.uk website).
CMA takes a stand
It is clear that the CMA is intent on enforcing the position taken in its guidance and providers should take note.
In their final guidance, and accompanying documentation, the CMA stated that they would be carrying out a compliance review in a year’s time (November 2019). In the meantime, they are actively seeking to ensure that care providers are complying with consumer law and will not hesitate to take action where they believe that care providers are in serious breach.
We would encourage all providers to review their service user contracts, admissions and complaints documents to ensure that they are compliant with the CMA Guidance.
If you would like advice and assistance on ensuring your admissions and complaints processes and service user contracts are compliant with consumer legislation, please get in touch. We have developed model documentation which complies with the CMA guidance whilst protecting your business.
Please contact Hazel Phillips who would be happy to discuss how we can assist you:
01225 730 166 Email us
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