Summary: The Council was wrong to disallow a mortgage payment Ms X makes when it carried out the financial assessment for non-residential care services. The Council has now agreed to provide a suitable remedy so we have ended our investigation.

The complaint

1. Ms X complains about the way the Council assessed her financial contribution towards the cost of non-residential care services. In particular, she says the Council:
1. wrongly treated a monthly payment she makes to her sister as a private loan or arrangement when it is a mortgage registered as a legal charge on the property with the Land Registry. It should therefore be treated as a housing expense and disregarded in the financial assessment;
2. sent documents about a financial assessment it completed in April 2017 to an address she had left in 2011. As a result, she did not find out she was required to pay a weekly contribution to her care costs until February 2018 when a social worker gave her a copy of the assessment.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

4. I have discussed the complaint with Ms X and considered all the evidence she sent about the financial assessments and the agreement to pay her sister. I considered the Council’s response to my enquiries and its proposal for settling the complaint.
5. I have written to Ms X and the Council with my draft decision and considered their comments.

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What I found

6. Councils have discretion about whether to charge for non-residential services. Where a council decides to charge, it must follow the Care and Support (Charging and Assessment of Resources) Regulations 2014 (“the 2014 Regulations”) and have regard to the Care and Support Statutory Guidance. 
7. Where the council has decided to charge, it must carry out a financial assessment to decide how much the person can afford to pay.
8. Schedule 1 to the 2014 regulations set out the rules for treatment of income. Where an adult needs care and support, other than in a care home, councils must disregard any housing-related costs which the adult is liable to meet in respect of his or her main or only home.
9. The regulations define “housing-related costs” as any mortgage repayments, payments by way of rent or ground rent, council tax or service charges (other than those which are not eligible under the Housing Benefit Regulations 2006. The regulations do not define the term “mortgage”.
10. Direct payments are monetary payments made to individuals who ask for one to meet some or all of their eligible care and support needs. They provide independence, choice and control by enabling people to commission their own care and support to meet their eligible needs.
11. Essex County Council deducts the client’s assessed contribution from the Direct Payment before it is paid into their account.

Ms X’s circumstances

12. Ms X inherited her mother’s home when she passed away in 2014. Ms X is disabled and has several health conditions. She receives a Personal Independence Payment and Employment & Support Allowance. She has eligible care and support needs and is entitled to Direct Payments which she uses to employ personal assistants to meet her personal care needs.
13. Under the terms of her mother’s will, Ms X was required to pay half the value of the property to her sister. She entered into a legally binding agreement to pay this in 119 monthly instalments of £650 starting in March 2014. This was registered as a legal charge on the property with the Land Registry. The Land Registry documents refer to it as a “legal mortgage”.
14. In January 2015 the Financial Assessment team confirmed Ms X did not need to make a contribution to the care services following a financial assessment. It sent the letter to Ms X’s correct address. It said it would review the assessment annually.
15. Ms X did not receive a financial assessment in 2016. In April 2017 the Council sent a new financial assessment to an address Ms X had left in 2011. It was not forwarded to her. The new assessment showed Ms X was required to pay £42.64 per week towards the cost of her care services. The Council had deducted Council Tax, water rates and buildings insurance as allowable expenses. However, it did not treat Ms X’s monthly payment of £650 to her sister as a mortgage or housing cost.
16. Ms X later discovered a deficit in her Direct Payment account because the Council had reduced its payments to take account of Ms X’s assessed client contribution.
17. It was not until February 2018 that Ms X obtained a copy of the April 2017 financial assessment from her social worker. It was only then that she realised the charge had been applied. She then queried the financial assessment. She said the income figures were out of date, no allowance had been made for disability-related expenditure and all the correspondence had been sent to her former address.
18. In February 2018 the Council sent correspondence about the annual financial assessment to Ms X’s former address again. The letter was returned to the Council and then sent to her correct address. Ms X waited several months for a visiting officer from the Financial Assessment team to complete a new financial assessment. In October 2018 the Council sent Ms X a revised financial assessment. It said she had to pay a charge of £39.55 per week towards her care costs. It did not allow Ms X’s mortgage payment as an expense.
19. Between November 2018 and February 2019 Ms X challenged the Council’s decision not to treat her monthly payment to her sister as a mortgage. The Council described it as a personal arrangement Ms X had with her sister and said it was not a mortgage. Ms X provided evidence from the Land Registry records and bank statements to confirm she had made regular monthly payments of £650 to her sister’s bank account.
20. In March 2019 Ms X’s MP made enquiries to the Council about its treatment of the £650 payment. The Chief Executive replied. He said a mortgage is defined as a legal agreement by which a bank or building society lends money at interest in exchange for taking title of the debtor’s property. He says Ms X’s arrangement to pay her sister £650 every month was a “private arrangement”. It did not involve a mortgage broker or a financial institution. It says the Council’s policy was to disregard private loans or arrangements. The Chief Executive said Ms X had completed the complaints procedure. She could complain to the Ombudsman if she was not satisfied with its final decision.
21. Miss X complained to the Ombudsman. Following our enquiries, the Council reconsidered its decision. It agreed to treat Ms X’s £650 monthly payment to her sister as a mortgage and to deduct it as an expense. After taking this into account, the revised financial assessment resulted in a nil contribution towards care costs.
22. The Council also offered to pay Ms X £3,375.42 to recognise her distress and inconvenience. It said it had first assessed Ms X as liable to pay a charge in April 2016. It said it first became aware in January 2018 that she was in financial difficulties due to the imposition of the charge. It said its offer was based on the contributions Ms X would have had to pay towards her care from January 2018. In fact, as she had not paid any client contributions to her Direct Payment Account, she did not incur any financial loss.  It therefore offered this payment to recognise her time and trouble in pursuing the complaint and the distress this had caused.
23. Ms X says she had to reduce her care hours at times because she could not afford to pay her personal assistants.
24. Ms X is satisfied that the Council has included her mortgage payment as an allowable expense in the financial assessment and confirmed she does not have to pay anything towards her care costs. She does not want the Council to make any additional payment for her distress and her time and trouble. She would appreciate a written apology from the Council.

Analysis

25. Following its recent review of the financial assessment, the Council decided to allow the £650 per month as a mortgage payment. As a result, Ms X is no longer required to contribute towards the cost of her care. Ms X is pleased with this outcome.
26. However, it seems the Council would not have assessed Ms X to pay a contribution from April 2016 onwards if it had taken into account the £650 per month as an allowable housing-related expense then. Ms X has provided evidence that she has been making this payment every month since 2014.
27. It therefore follows that Ms X should not have been expected to pay any contribution towards her care costs from April 2016. The amount the Council actually paid into Ms X’s Direct Payment account was net of her assessed client contribution. This means the Council has paid Ms X less than she was entitled to receive.

Agreed action

28. Within one month the Council will:
• arrange for a senior manager to send a letter of apology to Ms X and send us a copy;
• confirm in writing to Ms X that she should not have been required to pay a client contribution from April 2016 when it first applied a charge;
• pay any deficit it owes to her Direct Payment account;

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Final decision

29. I have ended the investigation because the Council has agreed to provide a satisfactory remedy.

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Investigator's decision on behalf of the Ombudsman