Summary: Mr X complained the Care Provider increased his mother’s care fees more than the 5% it said it would. The Care Provider issued an unclear contract and provided misleading information in its fee increase notification letter. The Care Provider has agreed to review its contracts for all self-funding residents and to apologise to Mr X.

The complaint

1. Mr X complained on behalf of his mother Mrs Y. He complained the Care Provider increased her monthly care fees by more than the 5% it said it would.
2. Mr X wanted the Care Provider to acknowledge its error and refund the overcharge.

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The Ombudsman’s role and powers

3. We investigate complaints about adult social care providers and decide whether their actions have caused an injustice, or could have caused injustice, to the person making the complaint. I have used the term fault to describe such actions. (Local Government Act 1974, sections 34B and 34C)
4. If an adult social care provider’s actions have caused an injustice, we may suggest a remedy. (Local Government Act 1974, section 34H (4))
5. If we are satisfied with the Provider’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)
6. We may investigate matters coming to our attention during an investigation, if we consider that a member of the public who has not complained may have suffered an injustice as a result. (Local Government Act 1974, Section 34E, as amended)
7. Under our information sharing agreement, we will share this decision with the Care Quality Commission (CQC).

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How I considered this complaint

8. I have considered:
• all the information Mr X provided and discussed the complaint with him;
• the Care Provider’s comments about the complaint; and
• relevant law and guidance.
9. Mr X and the Care Provider had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

Relevant law and guidance

Care Quality Commission

10. The Care Quality Commission (CQC) is the statutory regulator of care services. Regulation 19 of the Care Quality Commission (Registration) Regulations 2009 states providers must give the service user, or person representing them, a written statement setting out the amount of fees to be paid.
11. The CQC does not dictate limits on how much care providers can increase fees by. However, providers must only increase fees according to a service user’s contract and should explain what the increases are needed for.

Competition & Markets Authority

12. In November 2018, the Competition & Markets Authority (CMA) issued guidance to care providers on contracts called ‘Helping care homes comply with their consumer law obligations’. The guidance states contracts which give care providers the right to make unlimited increases to the cost of services are likely to be unfair under consumer law. This is particularly the case where the resident must either pay the increase or leave the care home.
13. The guidance says contracts should clearly set out the circumstances where fees may change. Stating fees will rise because of ‘increased costs’ is not sufficient. Contracts should also state the method of calculating the fee change. It suggests fees are increased with reference to a published price index.

What happened

14. Mrs Y has lived in a residential care home since 2017. Her contract states ‘change of fees generally if the running costs in management’s sole discretion to justify it’. It says fees are reviewed annually and the Care Provider will give four weeks’ notice of any fee increase. The Care Provider has confirmed it has not updated its contracts since the CMA issued its guidance.
15. The Care Provider wrote to Mr X in late December 2019, explaining it would increase Mrs Y’s care fees from late January 2020 ‘in line with substantial increased staffing costs’, and the increase would be capped at 5%. It said the new charge would be £4,723.33 monthly.
16. Mr X sent a formal complaint to the Care Provider at the beginning of February 2020. He explained his calculations showed the Care Provider had increased
    Mrs Y’s fee by more than 5%, as her monthly fee in 2019 had been £4,441.00 per month.
17. The Care Provider’s response said there had been misunderstandings on both sides but that it would continue to charge £4,723.33 monthly.
18. In response to my enquiries, the Care Provider said there was a mistake in the fee increase letter. It should not have included the statement that the fees would be capped at 5%. It said the statement was included because it was in the document template and should have been removed. It has taken steps to make sure the template is checked more carefully in future.

Findings

Fee increase

19. Care providers are entitled to raise fees, however they must explain why the increase is necessary, ensure the fee payer is aware of the new amount and give sufficient notice so the fee payer can exercise their right to move. The Care Provider’s letter stated the new monthly cost, the reasons for the increase and gave sufficient notice. However, it did not explain how the increase was calculated, which was fault.
20. The letter stated the fee would increase by no more than 5%, when it increased by 6.36%. This information was incorrect and was fault. It meant Mr X thought the fee was wrong and went to the time and trouble of making a complaint.

Contract

21. Mrs Y’s contract did not meet the standards set by the CMA. It did not clearly specify the circumstances under which fees would increase, nor did it explain how the increases were calculated. This was fault and meant Mr X and Mrs Y could not reasonably know what the increases could be.

Agreed action

22. Within one month of the date of this decision, the Care Provider will:
• apologise to Mr X for providing incorrect information in its fee increase letter and explain how it arrived at the increased fees.
23. Within six months of the date of this final decision, the Care Provider will:
• review its contracts to ensure they comply with the CMA guidance around fee changes and issue the new contracts to all self-funded residents.

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Final decision

24. I have completed my investigation. I have found fault leading to personal injustice. The Care Provider has agreed to take action to remedy that injustice and prevent reoccurrence of this fault.

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Investigator's decision on behalf of the Ombudsman