CMA concerned some care homes may be in breach of consumer protection laws

The Competition and Markets Authority (CMA) confirmed on Wednesday that it had opened an investigation into potential non-compliance. The probe is "focused on concerns about certain care homes charging families for extended periods after a resident has died, and homes charging large upfront fees", it said. The CMA has not ruled out expanding the scope of the case or opening new ones.

The CMA revealed details of its investigation as it published initial findings from its market study into the care homes sector (55-page / 842KB PDF), which it opened in December last year. The report marks the half-way point in the CMA’s work and explains its emerging thinking on the sector and proposals for how to address the issues identified.

"Opening a consumer enforcement case is a clear statement of intent from the CMA and highlights its determination to protect vulnerable consumers," said expert in competition and consumer law compliance in the healthcare sector Tim Riisager of Pinsent Masons, the law firm behind Out-Law.com. "Nevertheless, the industry will be relieved to have avoided a reference for an in-depth market investigation. Market investigations are invasive processes which typically last up to 18 months and would have placed additional strain on limited resources."

According to the CMA, the findings from its market study so far suggest that "many people find it challenging to make decisions about care under the stressful and time pressured circumstances which generally apply".

It highlighted problems relating to consumers' engagement with the information care homes provide, the quality of the information provided in some cases, and confusion about "the social care system and funding arrangements". Many people also "do not know how to find and choose between homes", the CMA said.

The CMA also flagged concerns about the utility and effectiveness of customer complaints procedures in care homes. It said that "it is generally not realistic" to expect dissatisfied customers to move to another care home.

"Once settled, the upheaval of moving from a familiar environment can be extremely disturbing, and can adversely impact on the resident’s health," the CMA said. "It is therefore essential that effective mechanisms are in place for residents to express their views and, where necessary, have them acted upon. Our findings, however, indicate that complaints and redress systems often do not work well, as residents often find it very challenging to make complaints."

Despite these findings, the CMA also confirmed that many care homes offer a good service, and indicated that it is sympathetic to the overarching challenges faced by the sector.

In relation to the existing capacity and funding challenges, the CMA highlighted that "demand for care home services is expected to increase very substantially in the coming years", with the number of people aged 85 and over in the UK population projected to more than double by mid-2039.

"The level of care needed for people moving into a home is increasing over time because, having spent longer in their own homes, people are more frail when they do move into a care home," the CMA said.

The regulator said that sector faces "short-term funding pressures … and uncertainty over future funding". This means that there are currently "weak signals and incentives for the sector to undertake future investment necessary to grow capacity primarily intended to serve state-funded residents", it said.

Acting CMA chief executive, Andrea Coscelli, said that the CMA "will be focusing on finding ways to deal with these, and other concerns identified".

Riisager said that the CMA has left its options "wide open" regarding potential remedies.

The CMA said it could require more transparency over pricing, which it indicated could help shed light on any "price differentiation" that arises in cases where local authorities procure care home places from external providers compared to when places are self-funded.

The regulator also said it could consider how best to "embed consumer law compliance into the regulation of the sector", including potentially through sector regulators or through encouraging the development of voluntary codes of conduct.

Riisager said. "The proposals to increase transparency in relation to fees continue a trend identified in other consumer facing market studies conducted by the CMA, most recently in relation to the legal services market. Other plans to embed effective compliance into care homes would need to carefully considered in an already heavily regulated sector."

"Findings relating to procurement and funding go to the heart of the challenges facing the sector. It will be interesting to see how the CMA designs the remedies to address these issues and particularly how they interact with the powers and responsibilities of local authorities," he said

The CMA confirmed that its study to-date had identified no competition law concerns, but that it does intend to review procurement of care home places by local authorities.

Stakeholders have until 5pm on 5 July to respond to the questions the CMA has posed in its interim findings report.

Riisager said the consultation is an opportunity for organisations active in the care home sector to respond to the issues raised and help shape any remedies the CMA may decide to impose at the conclusion of its study, which is scheduled to be published before 1 December this year.

Pinsent Masons recently won Legal Advisers of the Year in the 'transactions in the private sector' category of the HealthInvestor Awards 2017.