Care homes: consumer protection case

The CMA is investigating concerns that some care homes may be breaching consumer law.

From:
Competition and Markets Authority
Published
14 June 2017
Last updated
8 December 2021 — See all updates
Case type:
Consumer enforcement
Case state:
Open
Market sector:
Healthcare and medical equipment
Outcome:
Consumer enforcement - undertakings
Opened:
13 June 2017

Update on Care Homes Work

8 December 2021: Revised consumer law advice for care home providers published.

In July 2021 the High Court dismissed the CMA’s enforcement action against Care UK in relation to upfront administration charges. On 13 August the CMA suspended its Consumer Law Advice for Care Home Providers and supporting documents while it considered the possible implications of the judgment.

Having completed its review, the CMA has updated and re-issued this Advice. Given the narrow subject-matter of the Care UK case, the vast majority of the Advice remains as originally stated. However, changes have been made to reflect the High Court’s approach in relation to administration charges. The CMA has also taken this opportunity to incorporate key aspects of its Consumer law advice on the charging of fees after death (originally published on 31 May 2018).

13 August 2021: Following the High Court’s ruling of 23 July 2021 in the CMA’s case against Care UK:

  • the CMA decided not to apply to the Court of Appeal for permission to appeal the judgment, given the Judge’s ruling that her judgment turned on the specific facts of the particular case, which limits both its significance beyond this case and the opportunity to appeal it
  • the CMA decided to discontinue its claim against Barchester. This is because many of the key facts in the 2 cases were materially similar. Having regard to its Prioritisation Principles the CMA has decided to discontinue its whole claim against Barchester
  • the CMA suspended its Consumer Law Advice for Care Home Providers and supporting documents while it considered the implications of the judgment in the CMA’s case against Care UK. The case concerned the charging of a large upfront administration fee. The CMA’s decision to suspend its guidance did not affect the duty of Care Home Providers to comply with consumer protection law

Although the High Court’s judgment was disappointing, it will not stop us continuing to work hard in the future to ensure consumers are protected using all the powers available to us.

Update on the CMA’s review of compliance to its consumer law advice

8 December 2021: The CMA will take a decision on the next steps for its review of compliance with the Consumer Law Advice for Care Home Providers in mid-2022.

5 November 2020: The CMA commenced work in November 2019 on a review of compliance with its consumer law advice for Care Home Providers. This work was paused in April 2020 due to COVID-19 with the intention of resuming it in 2021. Care homes providers are reminded of their obligation to comply with consumer law. Any information received from consumers and others will inform the review when it resumes.

Care UK gives refunds and undertaking for NHS Continuing Healthcare (CHC) residents

8 October 2020: The CMA has secured more than £1 million in refunds for those NHS funded residents at Care UK’s premium care homes who paid an unfair additional fee towards essential care. Care UK has also formally committed to stop charging this additional fee to current and future CHC residents at its homes.

CMA court action against Barchester

13 August 2021: Following the High Court’s judgment of 23 July 2021 in the CMA’s claim against Care UK, the CMA has decided to discontinue its claim against Barchester. This is because many of the key facts in the two cases are materially similar. In light of this and having regard to our Prioritisation Principles, the CMA has decided to discontinue its whole claim against Barchester.

24 March 2020: The CMA has now issued court proceedings against Barchester Healthcare Limited and Barchester Healthcare Homes Limited, (together ‘Barchester’). This action, taken under section 217 of the Enterprise Act 2002, comes after Barchester’s failure to address the concerns set out in a letter before action which the CMA sent to Barchester in July 2019.

25 July 2019: After a period of consultation under the Enterprise Act 2002 (EA02), a letter before action was issued to Barchester Healthcare Limited, Barchester Healthcare Homes Limited, Grove Limited and Barchester Holdco (Jersey) Limited (together ‘Barchester’) in relation to the administration fee and fees charged following a resident’s death.

The CMA believed Barchester was breaking consumer protection law by requiring a substantial non-refundable upfront administration fee from residents for which they received no services or products in return. It also believed that the company’s description of the charge, and what it was for, was misleading and that residents were told about the fee too late in the admission process. With regards to fees charged following a resident’s death, the CMA believed that Barchester was breaking consumer protection law by charging the fee for a period longer than outlined in the CMA’s guidance.

Although Barchester stopped charging an administration fee in January 2019, it had not provided the CMA with satisfactory undertakings, including provision for financial redress for consumers in relation to the administration fee. The letter before action notified Barchester that, if necessary, the CMA intended to issue a claim against it under section 217 of the EA02 concerning breaches of the Consumer Rights Act 2015 (CRA) and the Consumer Protection from Unfair Trading Regulations 2008. Consumer law enforcers, including the CMA, have had the power to seek enhanced consumer measures including financial redress for consumers from 1 October 2015.

CMA court action against Care UK

13 August 2021: Given the Judge’s ruling that her judgment turned on the specific facts of this particular case, which both limits its significance beyond this case and the opportunity to appeal it, CMA has decided not to apply to the Court of Appeal for permission to appeal the judgment. Although the High Court’s judgment was disappointing, it will not stop us continuing to work hard in the future to ensure consumers are protected using all the powers available to us.

23 July 2021: Following the trial, the High Court has issued its judgment, finding against the CMA. We asked the trial judge for permission to appeal the judgment and this was refused.

11 May 2021: The trial will commence on 11 May 2021 in the High Court and is due to finish on 18 May 2021.

22 June 2020: Proceedings against Care UK to seek redress for residents who have been charged a compulsory upfront administration fee have been re-scheduled to be heard in the High Court in May 2021.

7 February 2020: Proceedings against Care UK to seek redress for residents who have been charged a compulsory upfront administration fee are scheduled to be heard in the High Court in July 2020.

7 February 2019: The CMA has now issued court proceedings against Care UK Health and Social Care Holdings Limited and Care UK Community Partnerships Limited, (together ‘Care UK’). This action, taken under section 217 of the Enterprise Act 2002, comes after the CMA issued Care UK with a letter before action in December 2018.

Whilst Care UK has stopped charging a compulsory upfront ‘administration’ fee following CMA intervention, it has not agreed to make any refunds. The CMA is now seeking a court order to secure refunds for over 1,600 residents, some of whom have been charged as much as £3,000, and to stop Care UK from charging similar fees again in the future.

Three Care Home Providers revise their terms on the charging of fees after death

24 January 2019: Three Care Home Providers (Care UK, Hallmark Care Homes Group Holdings Limited and The Fremantle Trust) have made changes to their terms and conditions following the CMA’s investigation and publication of consumer law advice to Care Home Providers (CMA 81). Each of the care homes has, on a voluntary basis, made changes to the terms of their standard residential contracts, which cover the period for which fees are required to be paid following a resident’s death, and the treatment of their possessions.

The CMA considers that the changes made in these cases constitute satisfactory undertakings and has now closed each of these specific investigations.

Care UK issued with letter before action

6 December 2018: After a period of consultation under the Enterprise Act 2002 (EA02), a letter before action has been issued to Care UK Health and Social Care Holdings Limited and Care UK Community Partnerships Limited (together ‘Care UK’).

Although Care UK stopped charging an administration fee on 1 August 2018, it has not provided the CMA with satisfactory undertakings, including provision for financial redress for consumers. The letter before action notifies Care UK that, if necessary, the CMA intends to issue a claim against it under section 217 of the EA02 concerning breaches of the Unfair Terms in Consumer Contracts Regulations 1999, the Consumer Rights Act 2015 (CRA) and the Consumer Protection from Unfair Trading Regulations 2008. The CRA gave consumer law enforcers, including the CMA, the powers to secure financial redress for consumers from 1 October 2015.

Consumer law advice for Care Home Providers

13 August 2021: The CMA is suspending its Consumer Law Advice for Care Home Providers and supporting documents while it considers the implications of the judgment in the case the CMA brought against Care UK. The case concerned the charging of a large upfront administration fee. The CMA expects that many of the principles set out in the Advice will remain applicable and intends to reissue the Advice when its review is completed. The CMA’s decision to suspend its guidance does not affect the duty of Care Home Providers to comply with consumer protection law.

16 November 2018: The CMA has published the final version of advice for care homes about their obligations under consumer law. We’ve also published some other materials for care homes and residents and their families.

Consultation on draft consumer law advice for care homes

31 May 2018: The CMA has opened a consultation on draft consumer law advice for UK Care Home Providers for the elderly. This draft advice covers a range of issues including the provision of upfront information, contract terms and business practices, providing services with reasonable care and skill, and complaints-handling.

The consultation is part of the CMA’s ongoing consumer protection work in the care home sector. As part of this work, the CMA has also today published its final advice on the charging of fees after a resident’s death following a consultation earlier this year.

Advice for care homes on the charging of fees after death

13 August 2021: The Advice for Care Homes on the Charging of Fees After Death became Annex C of the Consumer Law Advice for Care Home Providers which was published on the 16 November 2018. The CMA is suspending its Consumer Law Advice for Care Home Providers while it considers the implications of the High Court judgment dated 23 July 2021 in the case CMA brought against Care UK. The case concerned the charging of a large upfront administration fee. The CMA expects that many of the principles set out in the Advice will remain applicable and intends to reissue the Advice when its review is completed. The CMA’s decision to suspend its guidance does not affect the duty of Care Home Providers to comply with consumer protection law.

31 May 2018: The CMA published its final consumer law advice on the charging of fees after a resident’s death, following a public consultation earlier in the year.

Sunrise Senior Living Ltd settlement and associated undertakings

9 May 2018: The CMA has secured more than £2m in compensation for residents of a major care homes group as part of an investigation into compulsory ‘upfront fees’.

Sunrise Senior Living Ltd (‘SSL’) will be offering pro-rata compensation to residents, or their representatives, who paid a community fee and moved into a Sunrise home on or after 1 October 2015 and who left, or passed away, within 2 years of entering one of their care homes in England and Wales. The level of compensation on offer will be based on the length of time spent in the home and the size of the community fee paid by the resident.

Under the settlement, current residents will also be eligible for pro-rata compensation, if they paid a community fee and moved into the home on or after 1 October 2015 and leave the care home - or pass away - within 2 years of entering the care home.

In addition, any residents who paid a community fee and moved into a Sunrise care home on or after 1 October 2015 whilst in receipt of NHS continuing healthcare (‘CHC’) will be fully refunded as, in the CMA’s view, charging such fees is not compatible with NHS rules or consumer law.

The CMA understands that Sunrise has already started the process of contacting individuals (or their families) who are eligible for an offer of redress. If anyone believes that they or a family member is eligible and has not been contacted they can contact Sunrise at enquiriescf@sunriseseniorliving.com. Sunrise requests that they include in that contact their name and/or the name of the resident that they are enquiring about, as well as contact information and details of which Sunrise Community (care home) this refers to.

As well as securing compensation in relation to the community fee, the CMA has obtained undertakings from SSL, the companies providing residential care under the Sunrise Senior Living brand and the controlling companies, that in future such fees will not be charged at all to new residents. The CMA will shortly be consulting on comprehensive guidance, which will include advice on large upfront charges. In this regard, these companies have agreed to comply with the advice (as set out in the undertakings) once finalised and published.

The companies have also agreed to abide by new CMA guidelines about the charging of fees after a resident has died, which is soon to be finalised and published following a public consultation.

Press release: £2 million in compensation for care home residents (9.5.18)

Consultation on draft consumer law advice for care homes on the charging of fees after death

19 January 2018: The CMA has opened a consultation on draft consumer law advice for UK Care Home Providers for the elderly. This draft advice covers the charging of fees after a resident’s death and the treatment of their possessions.

For relatives and representatives of deceased residents only

As part of the consultation, the CMA would also like to hear about the experiences of relatives and representatives of deceased care home residents.

Maria Mallaband Care Group undertaking

19 January 2018: A CMA investigation has resulted in one of the UK’s leading Care Home Providers dropping its policy of charging fees after a resident has died.

Action against Care Home Providers

30 November 2017: Following the launch of the investigation in June, in order to stop a number of Care Home Providers using certain business practices and contract terms, the CMA has now written to these providers setting out its concerns. The CMA’s focus remains, currently, on the charging of upfront fees and requiring fees to be paid for an extended period following the resident’s death.

As announced in the care homes market study report the CMA will also be consulting on new guidance in early 2018, regarding fees charged after death.

Case launch

On 13 June 2017, the CMA opened an investigation into a number of Care Home Providers, due to concerns that some of the contract terms and/or practices they use may breach consumer law.

At the moment the focus of this case is on self-funding residents and the issues of large upfront fees and the fees charged after a resident’s death.

The CMA is also separately undertaking a market study which is considering whether the UK market for the provision of care home and nursing home services to the over 65s is working well for residents and for businesses competing fairly. The market study has identified a number of other consumer protection concerns and consideration is being given as to how these can best be addressed. Further details can be found in the market study update paper.

Contact

Please send written representations about any competition or consumer issues to general.enquries@cma.gov.uk.

Updates to this page

Published 14 June 2017
Last updated 8 December 2021 + show all updates

  1. Update on care homes work, including care home providers advice on consumer law guidance, published.

  2. Updates made to the page following recent court judgment.

  3. Update in the case against Care UK.

  4. Trial commencement and finishing date published.

  5. Update on the CMA’s review of compliance to its consumer law advice for care home providers.

  6. Undertakings from Care UK published.

  7. Proceedings against Care UK have been re-scheduled to be heard in the High Court in May 2021.

  8. Court proceedings issued against Barchester Healthcare Limited.

  9. Update on the proceedings against Care UK.

  10. Care home provider Barchester issued with letter before action

  11. We have published the undertakings from three care home providers who have revised their terms on the charging of fees after death.

  12. Links to newly published care homes consumer law advice, and news story published. The new advice includes: Consumer law advice for providers A short guide for businesses A short guide for residents and their families An open letter to care home providers

  13. Final death fees advice published and details of new consultation added.

  14. Summaries of undertakings and press releases added.

  15. Consultation on draft consumer law advice launched and undertakings from Maria Mallaband Care Group published.

  16. Update added.

  17. First published.

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