CMA Consultation on care home consumer law advice launched and final guidance on post-death fees published

On 31 May 2018, the UK’s consumer and competition watchdog, the Competition and Markets Authority (“CMA”), launched a public consultation on its draft consumer law advice for care home providers for the elderly. This advice has been a long time coming. In December 2016, the CMA launched a UK-wide market study into care and nursing homes for people over 65, examining how the market works and whether care home providers are treating residents and their representatives fairly. In June 2017, as a result of information received during this study, the CMA opened up a number of consumer law investigations into various care home providers in relation to various business practices and contractual terms.

After a year of investigating these providers, the CMA has now published, and launched a consultation on, its draft advice on what practices and terms providers should adopt to comply with consumer law (the “Draft Advice”). This consultation follows a narrower, discrete consultation on fees charged to families after the death of a resident for which the CMA has now published its final advice (“Post-death Fees Final Advice”). This latter document will eventually be incorporated into the final version of the Draft Advice.

The advice contained in these documents comprises the CMA’s current views on consumer law. It is not a substitute for the law itself, and does not replace the role of the courts.

The CMA’s predecessor, the OFT, last published consumer law guidance for care homes back in 2003, which was abandoned in June 2017 on the launch of the CMA’s consumer protection investigations. Following this guidance, a number of developments in consumer law have taken place to enhance consumer rights, including the implementation of the Consumer Protection from Unfair Trading Regulations 2008 and Consumer Rights Act 2015. Therefore, if any providers have until recently been relying on the OFT’s 2003 guidance, it is likely this new suite of advice will have a material impact on their contracts and policies.

This briefing provides an overview of the terms and practices providers may need to address following finalisation of the CMA's broader Draft Advice, as well as the contractual changes providers should now consider making to comply with the CMA’s Post-death Fees Final Advice.

The Draft Advice

The Draft Advice sets out the CMA’s detailed views on the application of consumer law to care homes. It is relevant to all care homes, irrespective of whether their residents are self-funded or State-funded. The document contains guidance on four areas:

(1) Upfront information

Key information (e.g. on fees, the home’s main features and unusual/important terms) should be provided upfront to prospective residents and their families in a transparent and prominent manner. This may include setting out this information on the landing page of the home’s website, highlighting it on marketing materials and explaining it clearly to residents during their initial enquiries.

(2) Treating residents fairly

Providers should ensure their contractual terms are clear, user friendly and fair. This includes terms relating to: (i) before the resident moves in (e.g. upfront payments); (ii) after the resident moves in (e.g. varying terms of service); (iii) when things go wrong (e.g. financial penalties); (iv) when the resident leaves (e.g. trial periods and termination); and (v) terms specific to State-funded residents (e.g. third-party top-up fees).

(3) Quality of service

The fundamental implied obligation in all consumer contracts is that services are performed with reasonable care and skill. In the context of a care home, providers should ensure that residents’ needs are met in a caring environment. Providers must also comply with an additional level of Fundamental Standards, which are set by sector regulators (e.g. CQC).

(4) Complaints handling

Providers should make sure: (i) information about how and where to complain is well- publicised; (ii) the information is easy to understand and use; (iii) procedures are written and followed in such a way that complaints are dealt with fairly and effectively; and (iv) are applied consistently across their homes.

The Draft Advice also contains various illustrative examples of contract terms and practices that are likely to infringe consumer law, as well as practical steps providers can take to ensure compliance.

Post-death Fees Final Advice

The Final Advice, published on 31 May 2018, is intended to help providers understand and comply with their responsibilities under consumer law following the death of a resident. The advice aims to cover all kinds of charges (not simply weekly fees) families may continue to face from providers following death of a resident. Four main types of charges are covered:

(1) Weekly / residential fees

A provider should only charge residential fees:

• for up to 3 days following the resident’s death (and not after the room has been reoccupied); or
• until possessions have been cleared from the resident’s room (subject to a 10-day backstop period).

The charging period can be extended by agreement with a resident’s family (provided the family initiates the extension).

(2) Treatment of possessions

Homes can remove possessions after a certain period of time (e.g. after a 10-day backstop period) and charge for reasonable costs of removal and storage. If possessions remain uncollected, the home should give notice to the family before disposing/selling the possessions. If it is appropriate to sell items (e.g. because they are of high value), the home is obliged to obtain a reasonable price for them and refund families accordingly (less the home’s reasonable expenses).

(3) 3rd party top-up after death

Contract terms governing the period for which top-up payments must be paid should be the same as those that apply between the home and the local authority.

(4) ‘Shortfalls’ covered by the State

Shortfalls covered by funded nursing care (FNC) or local authority funding should not be passed on to families following death.

Next steps for care homes

As noted above, the CMA is currently seeking views on its Draft Advice from a range of interested parties, including care home providers and their representative bodies, residents and their families, and consumer groups. The consultation closes on 12 July 2018, following which the CMA will review comments received and aim to publish its final advice in Autumn 2018. Once published, the CMA will expect all care homes to review their contractual terms and practices and make changes where necessary.

As the Post-death Fees Final Advice is already in effect, care homes may need to make some amendments to their contracts now, or risk enforcement action by the CMA, other sector regulators or by consumers. Care homes should therefore start to review their policies and contracts to consider what changes may be required.

In parallel care homes may wish to participate in the CMA’s Draft Advice consultation to provide the CMA with their views on the document and highlight any changes they consider go beyond what is required under consumer and/or unlikely to work in practice.