The CMA has issued court proceedings against Care UK after it refused to refund residents who had to pay a compulsory up-front fee.
Last December, the Competition and Markets Authority (CMA) told Care UK, one of the UK’s largest care home providers, that it must refund over 1,600 residents who were charged a compulsory upfront ‘administration’ fee of as much as £3,000 or else face legal action.
The CMA believes the care home provider was breaking consumer protection law by requiring a substantial non-refundable administration fee from residents for which they received no services or products in return. It also believes 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.
According to the CMA, Care UK has stopped charging this fee following CMA intervention, but it has not agreed to refund any residents. As a result, the CMA has issued court proceedings and is now seeking a court order to secure refunds for those affected. Ultimately, only a court can decide whether any conduct breaches consumer protection law.
The CMA will argue that in charging these administration fees, Care UK used contract terms and practices that were unfair and contrary to consumer protection law. The CMA will also argue that Care UK should be prevented from charging these – or similar fees – in the future.
In a statement, Care UK said that it does not accept the Competition and Markets Authority’s views on the matter of administration fees and will be defending the legal action.
A spokesman said: “We do not believe there is any evidence whatsoever to suggest residents have been disadvantaged or that our historic fee structures were in breach of consumer law. We have always been transparent about our application of administration fees and people have always had a wide choice between different care home providers.
“We simplified our fee structure for residents funding their own care earlier this year to incorporate all one-off assessment and admission costs and adjusted our weekly fees accordingly. This approach is in line with the CMA’s final Guidance, which was published last month.
“Nonetheless, we do not agree with the CMA’s claim that there are no one-off costs associated with an admission to a care home, or that covering these costs (which include initial care assessments and the installation of any specialist equipment) through an initial one-off fee was detrimental to residents in Care UK homes.
“Admission fees had been applied, and continue to be applied, by many other providers and had the virtue of lowering weekly fees to reflect the one-off nature of these activities, particularly benefiting longer staying residents.
“The CMA is simply wrong to suggest residents who paid a one-off admission or administration fee, covering genuine and essential activities undertaken once, before admission, should be wholly or partially refunded. Without the previous one-off fee, weekly fees would have been commensurately higher, so no loss has been suffered.
“Our admission processes ensure prospective residents are aware of key terms in our contracts, including our fee structure, very early in their discussions with us and well before they finalise their choice of care home.”
In November 2018, the CMA issued comprehensive advice to care homes to help them understand their responsibilities under consumer protection law, as well as an open letter urging them to review their practices in light of the guidance immediately. Care homes should make sure that their contract terms and business practices are in line with this advice