15 April 2019

What IPs need to know – CMA consumer law advice for care homes for older people

IPs advising, or appointed to, the care homes sector need to understand the ramifications of the advice on consumer law in relation to care homes for older people issued on 16 November by the Competition and Markets Authority (CMA).

The CMA first became involved in 2016 following complaints by a number of residents and their families over what were seen as unfair contract practices within the sector such as the taking of a one month’s non-refundable deposit when a resident was admitted to a home. This was said to be necessary for such things as cleaning and renovating the resident’s room when they moved or passed on.

Care home providers were considered by the CMA to be acting unfairly; it did not appear to appreciate that consumers were already protected by the Unfair Contract Terms Act 1977 or perhaps felt that such protection was inadequate.

The CMA announced its concerns in an initial report published on 30 November 2017 to which the Government responded last March, announcing a consultation period which lasted from 31 May to 12 July.

The CMA published its response to the consultation on 16 November but, more particularly, also published a 149-page guidance document for providers, a much more concise short guide for care home businesses and a three-page open letter to care home providers.

All these documents are aimed at pushing providers into having their contracts with residents, particularly those on a privately funded basis, fully overhauled to ensure that they are compliant with existing consumer protection.

IPs need to ensure that services to which they are appointed are fully compliant with this guidance – which will involve a full review of existing service user contracts – as soon as possible. If they fail to do so, they risk the service facing civil, or even criminal, action by the CMA or trading standards, which will only serve to reduce and prolong any realisations.

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About the Author
Derek Jones, Partner
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