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Are care homes breaking consumer law?

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Posted by Christine Jackson on 31 July 2017

Christine Jackson - Commercial Contracts Solicitor
Christine Jackson Partner

The Competition and Markets Authority (CMA) has recently published its initial findings following a review of the care homes market.

As a result of the initial findings, the CMA has launched a separate enquiry into the possibility that care homes are breaking consumer legislation by, for example, charging large upfront fees or requiring payment of fees after a resident’s death.

Consumer legislation applicable to care homes

The Consumer Rights Act 2015 (the ‘Act’) applies to all businesses that provide goods or services to consumers. Care homes provide care services to consumers so are caught by the Act.

Under the Act, all services supplied to consumers should be:

  • carried out with reasonable care and skill;
  • completed for a reasonable price (if no price is specified);
  • completed within a reasonable time (if no timescale is provided); and
  • completed in accordance with any information said or conveyed in writing to the individual which is  relied upon (this will include quotations, assurances and any other information provided before going into the care home).

The Act also includes rules on unfair terms in consumer contracts. A term of a contract for care services may be unfair if it causes a significant imbalance between the rights and obligations of the care home and the resident. Given the vulnerability of many care home residents, care homes should be especially careful to ensure the terms of their contracts are fair.

A care contract could be unfair if, for example:

  • It charges disproportionately high termination fees for cancellation or it requires residents to give an excessively long period of notice of termination.
  • The contract price and/or the services being provided for the price are not “transparent and prominent” (for example, they are hidden away in small print) and the fees payable are not clear. One of the findings of the CMA is that some care homes have been charging large upfront fees without making it clear what these fees apply to.
  • It allows the care home to decide the price payable after the resident has already become bound to the contract. There are allegations that care homes often have the ability to increase fees without providing an explanation or breakdown of the increased fees to the resident.

In general, contracts with consumers must always be very clear, avoiding legal language and in a readable size font.

Considerations for care homes

In light of the CMA’s investigation, care homes would be well advised to review their standard contracts with residents and consider (as a starting point):

  • Is the information given to prospective residents and their families clear in relation to the service provided and all the associated costs?
  • Is the same information that is provided to prospective residents contained within the final contract with residents?
  • Is the standard contract used with residents in plain English, avoiding legal terminology?
  • Are the terms of the contract fair, for example, is there sufficient notice of fee increases and justified reasons for doing so? How long is the notice period if the resident wishes to leave the home and is any termination fee justified?
  • When fee increases are announced, is the resident given enough information to justify the fee increase?
  • Is there an established complaints procedure which is clear and accessible to care home residents and their families?

About the author

Christine helps clients manage risk and financial exposure in their day to day business dealings.

Christine Jackson

Christine helps clients manage risk and financial exposure in their day to day business dealings.

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