Summary: Mrs P complains the Council did not properly explain what her parents needed to pay towards residential care that her father receives. We uphold the complaint noting the Council has recognised that its communications fell short of best practice. This caused the care provider to pursue debt recovery from Mrs P’s mother in a way the Council accepts was unacceptable. We consider the Council has offered a satisfactory remedy to Mrs P’s complaint. The Council has also agreed a review of existing contract arrangements with care providers. This is so it can consider what wider lessons it may need to learn from this complaint.

The complaint

1. I have called the complainant, ‘Mrs P’. She complains on behalf of her parents ‘Mr and Mrs Q’. Mr Q lives in a residential care home in the Council’s area. Mrs P’s complaint concerns collection of fees owed for Mr Q’s care. Mrs P complains:

• The Council did not give Mrs Q enough information when Mr Q moved into care to understand what charges both needed to pay towards his care.
• The Care Provider, acting for the Council, acted unreasonably when collecting charges outstanding.

2. Mrs P says the Care Provider’s actions caused both her and Mrs Q distress, particularly when it threatened legal proceedings to recover charges. Mrs P considers if the Council had given proper notice of charges to Mrs Q, this would not have happened.

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The Ombudsman’s role and powers

3. We investigate complaints about councils and certain other bodies. Where an individual, organisation or private company is providing services on behalf of a council, we can investigate complaints about the actions of these providers. (Local Government Act 1974, section 25(7), as amended)
4. 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)
5. 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

6. Before issuing this decision I considered:

• Mrs P’s written complaint to the Ombudsman and any supporting information she provided. This included information I gathered from her in a telephone conversation.
• Information provided by the Council in response to my enquiries and another investigation concerned with its policies on collecting charges for care.
• Relevant law and guidance as referred to below.

7. I also sent both Mrs P and the Council a draft decision statement setting out my proposed findings. Both parties said they accepted our findings.

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What I found

Legal considerations

8. The Government publishes statutory guidance in support of the Care Act 2014 (the care and support statutory guidance which I refer to as ‘the guidance’ below). Section 8 of the guidance explains that where a local authority arranges care and support to meet a person’s needs it can usually consider if that person can afford to contribute to that care and support. This includes those who move to residential care arranged by the Council.
9. The guidance says that where it charges people for care and support, arrangements should be “clear and transparent so people know what they will be charged”.
10. The guidance says that: “Where a local authority is meeting needs by arranging a care home, it is responsible for contracting with the provider. It is also responsible for paying the full amount, including where a ‘top-up’ fee is being paid. However, where all parties are agreed it may choose to allow the person to pay the provider directly for the ‘top-up’ where this is permitted” (see also guidance in Annex A quoted below).
11. Both Section 8 and Annex A of the guidance explain that when someone moves to residential care they should have choice over the accommodation needed to meet their needs. This is so long as the accommodation will not cost the council “more than the amount specified in the adult’s personal budget”. A personal budget is the amount a council assesses as needed to meet that person’s care needs. A council should always share its calculation of a personal budget with the user of services or their representative.
12. A person (or their representative) can choose to move into accommodation that costs more than the personal budget. The guidance explains that in these circumstances a third party can pay a ‘top up’ to pay the difference between the personal budget and the cost of accommodation. But this is only when the council can show they had the alternative of accommodation at the personal budget rate.
13. The guidance says: “The local authority must ensure that the person paying the ‘top-up’ is willing and able to meet the additional cost for the likely duration of the arrangement, recognising that this may be for some time into the future. Therefore, it must ensure the person paying the ‘top-up’ enters a written agreement with the local authority, agreeing to meet that cost”.
14. Further, the local authority “must provide the person paying the ‘top-up’ with sufficient information and advice to ensure that they understand the terms and conditions”.
15. Whenever anyone enters a top-up arrangement, the guidance says the council remains responsible for the total cost of the placement. The guidance says a council can agree with the third party they pay the provider the ‘top up’. However, the guidance says, “this is not recommended” and gives alternative choices, including that the third party pays the top-up to the local authority which “then pays the full amount to the provider”.
16. Annex D of the guidance sets out how a council can seek to recover a debt for non-payment of care charges. The guidance explains that “ultimately the Care Act enables a local authority to make a claim to the county court for a judgment in order to recover the debt”. But before doing so it “will wish to consider the full range of options in order to secure the contributions owed to them”.
17. The guidance says that “When designing their system for debt recovery in social care, local authorities should be aware of the population they are dealing with. Unlike council tax or rent arrears debt, the local authority is not dealing with the general population. Much of this is debt is likely to be from a move into care homes of very frail people in their 80s and 90s, many with dementia. All debt recovery systems should be designed with a full understanding of the needs and capacities of this population to engage with the system being designed”.
18. It also says: “local authorities will want to bear in mind the following principles when approaching the recovery of debts:

• possible debts must be discussed with the person or their representative
• the local authority must act reasonably
• arrangements for debt repayments should be agreed between the relevant parties
• repayments must be affordable
• court action should only be considered after all other reasonable avenues have been exhausted.”

19. Further guidance stresses the need for councils to discuss with users of services and their representatives “at the outset” how it will collect charges. Also, that they are “bound by the public law principle of acting reasonably at all times”.

Key facts

20. Mr Q has dementia and moved into a residential care home in late 2016. The Council arranged that placement. Initially Mr Q entered the care home for respite but then became a permanent resident. The Council carried out a financial assessment and assessed Mr Q should pay £135 a week towards his care. In addition, Mrs Q would pay £30 a week towards Mr Q’s care as a ‘third party top up’. These charges have remained around the same since, with small annual increases.
21. Until December 2018 Mrs P did not know that Mrs Q had not paid charges for Mr Q’s care. However, around that time Mrs Q brought to her attention a letter referring to outstanding invoices from the Care Provider. It transpired that over £20,000 was outstanding in non-paid fees for Mr Q’s care. Mrs Q had paid neither the third party top-up nor arranged Mr Q’s contribution.
22. In correspondence with Mrs P, the Care Provider said it had sent Mrs Q information when Mr Q moved into its care. It said this had set out the charges she should pay. Mrs P does not dispute this. She has also found Mrs Q had received invoices from the Care Provider for charges. But Mrs P says Mrs Q found the Care Provider’s invoices unclear and thought they were for information only as she believed the Council had agreed to pay for all Mr Q’s care. Mrs P says at no point did the Care Provider speak to her or Mrs Q about the sums owing for Mrs Q’s care, despite them visiting Mr Q often. Nor did the Care Provider write specifically about the arrears or send any cumulative invoice before December 2018. The Care Provider has not answered questions from Mrs P about how the debt grew so large without it writing to Mrs Q before December 2018.
23. Once Mrs P began representing Mrs Q, she tried to discuss with the Care Provider payment of outstanding charges. The Care Provider said the contract they had with the Council entitled them to recover direct from users of services and their representatives, any unpaid charges for care owed for more than 60 days. The Care Provider would not agree time for Mrs Q to pay any debt. They instructed solicitors who threatened recovery action through the Courts. They asked Mrs Q to give the Care Provider a voluntary legal charge over her home.
24. When her contacts with the Care Provider did not resolve this matter, Mrs P took up correspondence with the Council, making a complaint in March 2019. She met and corresponded with a contract manager. They said when the Council learnt a user of care home services was in arrears it would “pay the provider 60 days contributions”. But “it is expected the provider will be responsible for collecting any further amounts due”.
25. In view of the Care Provider and Council responses to her contacts Mrs P sought legal advice costing her around £700.
26. In later correspondence the Council accepted that Mrs Q no longer had the financial means to pay any top-up for Mr Q’s care. The Council began meeting that cost and paying the Care Provider directly the top-up amount from the end of May 2019.
27. Mrs P has asked the Council to set out where it explained to Mrs Q the charges for Mr Q’s care, including the top-up arrangement. She says it has failed to do so. She also asked the Council to intervene with the Care Provider about how it pursued the debt. But until we made enquiries in this case it had declined to do so.
28. From January 2019 onward Mrs P arranged payment of Mr Q’s contribution. It also came to light two payments Mrs Q made to the care provider in November 2016 and January 2017, for respite care, had not been applied to Mr Q’s account. The Council also made a payment of three months charges for Mr Q’s care. When we began investigation of this complaint the arrears of care charges had therefore reduced to £17340.

The Council’s contract with care providers

29. As part of my investigation I sought to understand why the Care Provider, and not the Council, asked Mrs Q to pay charges outstanding for Mr Q’s care. I found the Council has a contract with Care Providers with whom it is placing clients that sets out the following:

• That Care Providers will collect both the resident’s contribution and top-up fees on behalf of the Council.
• Care Providers will chase for payments one month after any sum falls due and then send reminders at least once a fortnight for up to 60 days.
• A Care Provider can only obtain payment from the Council after 60 days.
• The Care Provider must tell the Council of a debt owing for 60 days within seven days of it falling due. If it does not the Council can deduct from any sums it pays to the Care Provider any further debt falling due after that date.
• The Council can terminate a placement if a debt is unpaid for 60 days.

The Council’s response to the complaint

30. The Council said it regretted that Mrs P’s complaint did not come to the attention of senior officers until we made enquiries. But they had now considered the complaint. The Council said it should have ensured Mrs Q received information about charges for Mr Q’s care in “a clearer [and] more timely” way. It also found the Care Provider acted “unreasonably and inappropriately […] falling short of the standards we expect” in how it tried to collect sums owed.
31. The Council accordingly made proposals to remedy the complaint as follows. That it would:
1. Apologise to Mrs P for these faults.
2. Pay Mrs P £300 in recognition of her time and trouble pursuing the complaint.
3. Continue to pay the third party top up that it previously asked Mrs Q to pay. It will not require payment of any arrears relating to the top up.
4. Discharge the outstanding debt of £17,340 representing payments due between September 2016 to January 2019.
5. Pay £700 to Mrs P towards her legal costs.
6. Address the Care Provider’s “unreasonable behaviour”.

My findings

The complaint about information given to Mrs Q

32. I have considered each part of Mrs P’s complaint in turn. Given the Council’s comments summarised above, I did not ask for further detail about the circumstances in late 2016 when Mr Q entered residential care. I initially wanted to know more about what information the Council gave Mrs Q about the contribution it had assessed Mr Q should make towards his care and the ‘top-up’ she would pay. But it is now agreed by all parties, that information given by the Council at the outset fell short of best practice. It is likely on balance therefore the Ombudsman would find fault.
33. However, because of the Council’s proposals to remedy this complaint I do not consider I need make a definitive finding on this point. Because any injustice arising from a fault in the information given to Mrs Q will be remedied by what the Council has proposed. As it no longer expects Mrs Q to pay any more towards the debt which accrued due to her confusion over what she should pay. I could not achieve any better outcome for this part of the complaint through further investigation of it.

The complaint about the Care Provider’s collection of debt

34. The Council accepts the Care Provider’s actions in this case were unacceptable. I would not come to any different conclusion, based on what I know. I find the debt collection process followed by the Care Provider did not take account of the following:

• How the debt arose and the extent to which poor information at the outset may have led to Mrs Q’s non-payment.
• Its own administration. I share Mrs P’s concern the Care Provider should wait until December 2018 to put in writing the debt owed by Mrs Q then. It also appears it miscalculated the debt by not taking account of a payment Mrs Q had made in 2016.
• The need to consider any proposals put forward for repayment by Mrs P over time. I have seen nothing to suggest the Care Provider entered negotiation with Mrs P in line with the Annex D principles set out above.

35. All of this would lead me to find fault. As the Care Provider was acting on behalf of the Council in providing care to Mr Q and in collecting any debt owed for his care, then that finding is against the Council.
36. The fault has caused Mrs Q and Mrs P an injustice. They suffered unnecessary distress after receiving unexpected demands for money they could not pay straight away. The Care Provider, again acting for the Council, and the Council itself, then compounded that distress by their responses to Mrs P’s contacts. This also put Mrs P to unnecessary time and trouble and caused her reasonably to seek legal advice.
37. I welcome the Council has recognised this fault and injustice and put forward proposals to remedy the complaint. I consider the proposals set out at paragraph 31 a) to e) will provide a fair outcome to the complaint for Mrs P and Mrs Q.
38. I also welcome the Council’s suggestion that it will address with the Care Provider its unreasonable behaviour. But I consider this alone will not address the wider implications of this complaint. It is relevant I consider these given the Ombudsman’s broader duty to consider any wider public interest raised by complaints made to us.
39. This complaint draws attention to the current contractual arrangements the Council has with Care Providers for collection of user’s contributions and third party top-ups. I note the law and statutory guidance allows for third parties paying ‘top-ups’ towards care, to pay care providers directly in some circumstances. As the Council is aware we are concerned with its practice in this area. However, I will not reiterate those concerns here, understanding there is separate investigation being undertaken into that.
40. I will therefore focus my further comments in this case on the Council’s practice of asking Care Providers to collect client charges for care directly. I will not comment on whether this practice is lawful, although I note the Council defends the general principle that a Care Provider can collect client contributions on its behalf. My concerns is there are problems inherent with the current contractual arrangements. These carry the risk Care Providers will engage in inappropriate debt collection practices.
41. First, the arrangements provide that users of services or third parties must go at least 60 days into arrears before the Council will begin to pay sums owed to them. This will leave a gap in funding Care Providers may urgently try to fill without oversight from the Council.
42. Second, if a Care Provider fails to tell the Council of a debt that has accrued within a specified timescale, the Council says that it will not pay any further debt that arises until it is so told. So, the Care Provider has provided a service which the law requires the Council to pay for, yet the contract does not oblige the Council to pay it. A Care Provider in those circumstances faces significant financial loss and may choose, as in this case, to therefore seek to recover sums from the user of services or their representatives. This is something the Council accepted it could do in this case without its oversight. I consider there is a gap therefore in what the Council expects providers to do, should they fail to tell the Council of a debt in the specified timescale.
43. Third, linked to the above I note the contract takes no account of the statutory guidance set out in Annex D. I quoted above the expectation that when collecting debts owed by the users of care services, local authorities must consider the potential vulnerability of the client base they are dealing with. They must further ensure they act reasonably and do not resort to the sanction of Court proceedings until they have tried and exhausted other possibilities. It is unacceptable the Council should have arrangements for delegating debt collection that do not take account of this guidance.
44. Fourth, the contract arrangements also leave open the possibility that residents may receive notice to leave their placements with the Council having no prior involvement in collecting sums owing.
45. The matters detailed in paragraphs 41 to 44 also lead me to find fault therefore. The Council’s proposals for remedying this complaint address Mrs P and Mrs Q’s injustice and may result in better service from the individual care provider in the future. But I cannot see they will prevent further injustice arising to others which might be because of the current contract arrangements. Before we could complete this investigation therefore, I wanted the Council to also agree action that would address the wider concerns raised by this complaint. I welcome it has agreed this, as set out below.

Agreed action

46. To remedy this complaint the Council has agreed that within 20 working days of this decision it will carry out the action it has proposed and which I have summarised at paragraph 31 (a) to (f) above.
47. In addition, within three months of a decision on this complaint the Council will write to us having completed a review of its current arrangements for care providers to collect client contributions on its behalf. That review will address as a minimum the following matters and whether the Council proposes any changes to its policy in these areas:
1. The clause in its contract to Care Providers that means it will not pay for care it has arranged unless the care provider tells it of arrears of client or third party contributions within a specific timescale. It needs to consider where that leaves the user of the service and if they may be exposed to debt recovery from the care provider.
2. How its arrangements take account of the statutory guidance set out in Annex D that look to safeguard those in debt for care charges from oppressive debt collection practices. It will ensure care providers acting for the Council in debt collection take account of this guidance.

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Final decision

48. For reasons set out above I uphold this complaint finding fault by the Council causing injustice to Mrs P and Mrs Q. The Council has agreed action that will remedy this complaint in a way that I consider will provide a fair outcome. Consequently, I can now complete my investigation satisfied with its response.

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Investigator's decision on behalf of the Ombudsman