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CMA unveils consumer law advice for care homes

Out-Law News | 20 Nov 2018 | 10:18 am | 2 min. read

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

The advice follows an investigation into the potential non-compliance of care homes and a market study into the sector in 2016 and 2017. The investigation found that some care home residents were at risk of unfair treatment, and recommended urgent reform.

In its advice (149 page / 1.15MB PDF), the CMA has outlined what upfront information care homes should give to potential residents, families or representatives to help them make informed choices. Information should include an indication of the fees charged to self-funders, and any important or "surprising" terms and conditions that would apply, it said.

Care homes are advised on how to 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 advice is relevant to all care homes, regardless of whether residents are self-paying or state-funded. The CMA also noted that care homes' consumer law obligations to perform services with reasonable care and skill sit alongside sector-specific obligations enforced by sector regulators, including the Care Quality Commission (CQC), the Care Inspectorates in Scotland and Wales, and the Regulation and Quality Improvement Authority in Northern Ireland.

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 said unfair contract terms would be unenforceable.

Competition and consumer law expert Tim Riisager of Pinsent Masons, the law firm behind Out-Law.com which was named independent legal advisor of the year at the recent Laing Buisson healthcare awards, said the guidance addressed issues highlighted in the CMA's market study as well as enforcement action taken against care home operator Sunrise Senior Living (SSL). The CMA found that SSL was charging residents upfront fees of several thousand pounds, which had to be paid before they had secured a place at the home.

In May this year, SSL agreed to pay more than £2 million in compensation, and provided legally-binding commitments to stop charging upfront fees for the future.

"The guidance is extensive but presented in a user-friendly format," Riisager said. "For example, the information which should be provided on first contact and prior to the offering of places is clearly highlighted and there are examples of terms which are likely to be 'unfair'."

"Operators may implement many parts of the guidance through process improvements, such as new complaints procedures or amendments to terms and conditions. However, the new guidance on performing service with reasonable care and skill overlaps with CQC requirements, raising the prospect of parallel enforcement actions for operators," Riisager said.

The CMA has sent an open letter to care homes reminding them of their responsibilities and suggesting they review the advice. It said it would conduct a review in 12 months' time to assess care homes' compliance with consumer law, but could take action before then if it finds care homes are treating residents and their families unfairly and breaking the law.

"The CMA's commitment to carry out a compliance review in November 2019 demonstrates that operators must act on this guidance," Riisager said. "As illustrated in the SSL decision, failure to comply with consumer law can have substantial financial implications and potentially lead to court action, not to mention associated reputational damage."