Business Legal

CMA update

Jenny Wilde Senior Associate Solicitor, Ridouts Law

Managing Care Contracts

The Competition and Markets Authority (CMA) has published advice for care home businesses about their obligations under consumer law.

This guidance follows a two year investigation into the non-compliance of care homes and a market study into the sector. The CMA found that some care home residents were at risk of unfair treatment, and recommended urgent reform.

The resulting advice is 150 pages long and in the document the CMA outlines what upfront information care homes should give to potential residents, families or representatives to help them make informed choices. It emphasises that information should include “an indication of the fees charged to self-funders, and any important or “surprising” terms and conditions that would apply”.

The guidance attempts to give practical advice on how care homes can make sure contract terms and the way residents and their representatives are treated is fair, as well as how to handle complaints fairly and ensure their complaints procedure is easy to find and use. The latter is a pre-existing regulatory requirement that providers should already have addressed.

This guidance relates to all service users, regardless of whether they are self-paying or state-funded.

The guidance warned that care homes failing to comply could face court action to stop infringements and seek compensation and, in some cases, criminal prosecution. Residents are also able to seek damages in the courts and the CMA has stated that unfair contract terms would be unenforceable.

We advise care staff dealing with contracts between the Home and service users to be very clear about the terms of the contract. The contract itself should be written in plain and simple language and service users (or their families where the service user lacks capacity) should have a full understanding of what the agreement means.

The CMA advice should, in our view, prompt providers of health and social care services to revisit their contracts to ensure that terms are clear and not excessively long. Service users and their families should be afforded the opportunity to discuss any aspects of the contract that they are confused by.

Direct channels of communication should be open between the provider and the families in the run up to admission to resolve as many queries as possible in advance of the placement, although often the nature of such placements doesn’t always allow for this.

Providers should inevitably expect more complaints about their fees and contracts as a result of this development.  It would be prudent for providers to review and revise service user contracts as a priority in order to ensure that they comply with consumer law to avoid costly disputes going forward.

The CMA has sent an open letter to care homes reminding them of their responsibilities and suggesting they review the advice. Ridouts would echo this suggestion and recommend that providers fully reflect on their existing contracts and the way that they are presented to and digested by service users and their families. There are particular scenarios addressed by the guidance, for example, care fees charged after death that pose their own problems from a contractual perspective (e.g. balancing sensitivity with the practicality of time required to empty a room of a service user’s belongings and prepare it for the next person). Providers will need to carefully reflect on this issue and consider how it can be given a long term, contractual solution so that all parties are comfortable with how this matter will be dealt with.

Recent case law involving care home providers has shown that failure to comply with consumer law can have serious financial and reputational implications and so organisations offering care services should be advised to reflect and amend agreements now, if necessary, to prevent any disputes going forwards.

Basic housekeeping and organisation now could avoid significant disruption in the future and we would advise that the guidance be reviewed carefully and advice taken on the potential pitfalls of existing contracts.


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