Out-Law News 2 min. read

UK competition and consumer authority revisits the care and nursing homes sector with an industry-wide market study


The Competition and Markets Authority (CMA) is to scrutinise the UK care and nursing homes market in a further look by authorities into the sector.

The CMA's predecessor, the Office of Fair Trading (OFT), examined the sector in 2005.

In its market study, the CMA will "assess how people find the experience of choosing a care home, explore whether the current regulation and complaints system gives residents adequate protection, and examine how well care homes are complying with their obligations under consumer law", it said.

The CMA said it was acting after "reports of potentially unfair practices and contract terms being used by some care homes". It said it wants to use its market study to determine how widespread the concerns are, how residents are impacted and whether or not the practices and contract terms are "likely to breach consumer law".

Expert in competition and consumer law compliance in the healthcare sector Tim Riisager of Pinsent Masons, the law firm behind Out-Law.com, said the CMA's study is also likely to consider whether competition between care homes is driving quality and value for money.

Riisager said the opening of the market study is "a further example of the CMA’s focus on the wider healthcare sector, where it is also carrying out a number of competition investigations into pharmaceutical companies and suppliers of medical equipment".

Competition and consumer law expert Giles Warrington of Pinsent Masons said that the CMA's decision to open a market study into the care and nursing homes industry does not mean it is formally investigating potential breaches of consumer or competition law. A market study is a separate tool that the CMA can use to "look at a market generally to determine whether it is working well for consumers", he said. 

Warrington said, though, that there are a number of options the CMA could take if its market study "does not reveal a clean bill of health". Options the regulator could pursue include opening up a full 18-month market investigation, pursuing individual competition or consumer enforcement cases, recommending changes to legislation or procurement practices, seeking undertakings from individual businesses active in the market, or even taking enforcement action where there is evidence that the law has been breached, he said.

"The market study is likely to last for a year, although the CMA should issue its provisional views within six months," Warrington said. Following its 2005 review, the OFT made a number of recommendations relating to information provision, contracts and complaints procedures.  Since then, there have been a number of reviews, including one by Citizens Advice suggesting concerns with pricing practices and transparency. These issues are expected to be explored closely by the CMA.

The CMA has also stated that it will look at regulation of the sector and what impact it has on competition and price. Warrington said: "The CMA has shown itself willing, in other sectors, to test whether regulation is justified in circumstances where it is impacting on competition."

In a statement, the CMA's acting chief executive Andrea Coscelli said: "Choosing a care home can be emotional and costly. It’s therefore essential that elderly people and their families have all the information they need to make the best possible choice, and then feel secure in the knowledge they will be fairly treated throughout their time there."

"We are undertaking a thorough review of the sector to make sure it works in the best interests of those who rely on it. We want to hear from care home providers about the services they offer and any challenges they face, as well as residents, families and charities who have experienced what it’s like to choose and live in a care home. Given the concerns we have heard about possible breaches of consumer law, we particularly want to hear from people who think they might have encountered unfair terms or practices," Coscelli said.

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