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East Sussex County Council (17 009 922)

Category : Adult care services > Charging

Decision : Upheld

Decision date : 23 Mar 2018

The Ombudsman's final decision:

Summary: Mrs Y’s complained about the amount the Council charged her parents for the work involved in setting up a Deferred Payment Agreement, which Mrs Y decided not to go ahead with in the end. There was fault in the way one of the charges was calculated and the way the Council responded to Mrs Y’s initial complaint. The Council has agreed to apologise to Mrs Y and refund the amount it has overcharged.

The complaint

  1. The complainant, whom I shall calls Mrs Y, complained on behalf of her parents, whom I shall call Mr and Mrs X. Mrs Y complained about the amount her parents were charged by the Council for setting up a Deferred Payment Agreement (DPA).

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The Ombudsman’s role and powers

  1. 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)
  2. 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

  1. I have considered the information I received from Mrs Y and the Council. I also interviewed a legal officer from the Council. I shared a copy of my d5raft decision statement with Mrs Y and the Council and considered any comments I received before I made my final decision.

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What I found

  1. The Care Act Guidance says that (9.72): Councils must set their administration charge at a reasonable level, and this level must not be more than the actual costs incurred by the council in provision of the Universal Deferred Payment Scheme, as set out in regulations. Relevant costs may include (but are not limited to) the costs incurred by a council whilst:
    • registering a legal charge with the Land Registry against the title of the property, including Land Registry search charges and any identity checks required
    • undertaking relevant postage, printing and telecommunications
    • costs of time spent by those providing the service
    • cost of valuation and re-valuation of the property
    • costs for removal of charges against property
    • overheads, including where appropriate (shares of) payroll, audit, management costs, legal service

What happened

  1. Councils must assess anybody in their area who appear in need of care services. Following a needs assessment, the Council must offer a financial assessment to decide who will pay for their eligible care needs. When people go into residential care, and they have over £23,250 of eligible capital, they are expected to pay for the full cost of their care home fees.
  2. A person who needs residential care, can enter into a “deferred payment agreement” with the Council. This lets a person use the value of their home to help pay their care home costs. The Council does not write the deferred payment off. It is repaid later, usually from the proceeds of the person’s house sale.
  3. Mrs Y held power of attorney (POA) for her parents Mr and Mrs X, who entered residential care in May 2015. The Council carried out a financial assessment and decided Mr and Mrs X were liable to pay the full cost of their care fees, as they had assets above £23,250 in their home.
  4. Mrs Y applied to enter into a DPA with the Council. The Council received the application in May 2016. Both the application and accompanying leaflet said the Council would invoice for the cost of any work already completed if the DPA did not go ahead.
  5. The Council’s Factsheet “Going into residential care: your options if you own property” says: There will be a set-up fee (£1,067), which you will need to pay. The fee for setting up the DPA is made up of:
    • Land registry fees
    • Costs for legal search and applying the legal charge
    • The valuation costs (£200 to £275 + VAT) will be charged separately.
    • “If you apply for a Deferred Payments Agreement and – for whatever reason - it does not go ahead, you or your estate will be invoiced for the cost of any work we have already completed”.
  6. Following the application, the Council organised an independent valuation of Mr and Mrs X’s property on 23 August 2016. The Council then wrote to Mrs Y on 30 August 2016 to confirm it passed Mr and Mrs X’s applications to its Legal Services Team to request a legal charge against the property in favour of the Council.
  7. The Council sent Mrs Y the proposed deferred payment agreement on 31 August 2016:
    • The DPA said (paragraph 4.3) that: “A copy of the local authority's current tariff of charges will be provided to you with this Agreement”. However, Mrs Y says this was not included.
    • The letter also said that: “In order that I am able to progress the applications for loan funding, please send me the original certified copy, not a photocopy of the documentation for Mr X and for Mrs X”.
  8. Mrs Y did not return a signed DPA and the Council had to send her a letter in November 2016 to ask for an update. Mrs Y called the legal team and said she had several questions about the DPA which she would ask by email. However, the Council received no further correspondence from Mrs Y. The legal team therefore had to send another letter to Mrs Y in December 2016 to ask if she wanted to continue the process.
  9. Mr X passed away on 31 December 2016. The Council’s legal team sent a further letter to Mrs Y in January 2017 to ask if she wanted to continue the DPA process for her mother. When the Council did not receive a response, it sent another letter in February 2017. The letter also advised Mrs Y how much she would have to pay for the costs involved with Mr X’s discontinued DPA application (£1,192). As the Council did also not receive a response to this letter, it informed Mrs Y in writing on 27 March 2017 that it would close her mother’s DPA application case. The letter also advised Mrs Y of the costs the Council had incurred in progressing her mother’s DPA application (£1,192).
  10. Mrs Y wrote to the Council in May 2017. She explained that she had been busy with selling her parents’ property and that her father’s death had been very traumatic for her. She asked the Council why it had almost charged the full cost of setting up a DPA, even though the process was not completed. She asked the Council to review the charges and provide a breakdown “of the elements and time allocated to each”.
  11. The Council responded through two letters in June and August 2017. It said that Mrs Y was aware of the costs involved in the DPA process. The letters included a chronological overview that showed how the Council had progressed the DPA application. The Council also explained that its legal team confirmed its costs were based on: drafting the DPA and legal charge, correspondence, and telephone attendances. Following further correspondence between Mrs Y and the Council, she remained unhappy and referred the complaint to the Ombudsman.
  12. Mrs Y told me that:
    • The fee for the property valuation (£330) seems exorbitant as it was only a desktop valuation, which must have taken about an hour. In addition, the fee is higher than the normal figure of £240, because the property was jointly owned, even though it was only one single valuation.
    • The only other work the Council still had to complete, after its letter of 21 August 2016, was: to issue the documentation for the loan agreement and the Land Registry Charge. All these are mail merge templates that do not take much time to complete.
    • The Council should have provided a proper itemisation or breakdown that showed how it arrived at the final cost.
    • The letter of the Council dated 31 August 2016 says it would not take any further action until it received a certified copy of the POAs and the signed DP agreements. However, as she did not submit these, the Council should not have progressed the application. This resulted in the Council incurring unnecessary charges after 31 August 2016.
  13. Mrs Y told me she would be prepared to pay a reasonable amount towards the cost of the actual work done, but believed she was entitled to a proper itemised invoice and a fair pricing structure.
  14. In response to my enquiries with the Council, a senior finance manager reviewed Mrs Y’s case. The review identified some errors with regards to the way in which the Council had charged Mr and Mrs X. This included charging £330 for the property valuation, which should have been £240. This resulted in a total overcharge of £261.50. The Council told me it will return this amount, offer a full apology and £200 to remedy Mrs Y’s time and trouble in pursuing this matter.
  15. The Council provided a chronology to me that showed the work the finance and legal team had to carry out after 31 August 2016.
  16. The Council told me that:
    • At the time the DPA application was stopped, all work had been carried out except the registration of the land registry charge (£40).
    • Legal Services: It charged £826, which covers 8.5 hours + overhead costs. The legal team actually carried out more than 8.5 hours of work, because it spent time chasing Mrs Y on several occasions. However, the Council only charges for a maximum of 8.5 hours. All work carried out by its legal team was necessary at the time it was completed.
    • Financial assessment team: It charged £177.45 based on 10 hours and 50 minutes of work done (£16.38/hour). The Financial Assessment Team manages the application process for DPAs before they are referred to Legal Services.
  17. The Council says it will review its processes to ensure correct invoices are raised and its closing correspondence for DPA cases detail how these costs have been accrued. It will work with its staff to ensure a clear understanding and offer more support with the correct application of the Council’s DPA policies.

Assessment

  1. In response to my enquiries, the Council reviewed the way in which it had charged Mr and Mrs X. The review identified there had been some fault. The Council said it will reimburse the amount it overcharged and provide a remedy to Mrs Y for the time and trouble she spent pursing the complaint.
  2. The Council did not provide the breakdown of the costs it had incurred, when Mrs Y initially asked for it as part of her complaint. The information the Council has subsequently provided showed the finance team and its legal team continued to work on the DPA after 31 August 2016. It also showed why this was needed. A significant amount of time was spent on: the legal and finance team preparing and sending letters to Mrs Y, internal discussions, dealing with a change of situation due to Mr X passing away etc.
  3. I have therefore obtained sufficient evidence that shows how and why the Council incurred the costs in relation to Mr and Mrs DPA application.

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Agreed action

  1. The Council has agreed to implement the following remedy, within six weeks of this decision:
    • Provide a written apology to Mrs Y for the above faults and £200 to remedy Mrs Y’s time and trouble in pursuing this matter and the distress it has caused.
    • Reimburse £261.50 to Mrs X.

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Final decision

  1. I have upheld Mrs Y’s complaint, because there has been fault with the way in which it charged her parents. I am satisfied with the Council’s proposed remedy to address the injustice caused, and have therefore completed my investigation.

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Investigator's decision on behalf of the Ombudsman

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