Summary: Mrs X complained that the Council failed to properly set up deferred payment arrangement for her mother Mrs Y and did not provide enough information. It also delayed sending the final invoice. Mrs X says this caused her much distress and worry about paying for Mrs Y’s care. We found the Council did fail to set up a deferred payment arrangement properly but did provide enough information. It also delayed the final invoice. This caused Mrs X uncertainty and stress. The Council has agreed to apologise and pay Mrs X £150. It will also take action to avoid similar problems in future.

The complaint

1. The complainant, whom I shall refer to as Mrs X, complained on behalf of her mother, Mrs Y, that the Council:
• failed to properly set up a deferred payment arrangement.
• did not provide her with enough information to understand her options around the deferred payment arrangement.
• significantly delayed sending the final invoice so Mrs X could settle the debt.
• used the wrong address.
2. Mrs X says this caused her much distress and worry about funding Mrs Y’s care. She would like the Council to accept monthly payments from her rather than Mrs Y as she wishes to preserve Mrs Y’s capital to pay for future care.

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The Ombudsman’s role and powers

3. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. 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)
5. We may investigate a complaint on behalf of someone who has died or who cannot authorise someone to act for them. The complaint may be made by:

• their personal representative (if they have one), or
• someone we consider to be suitable.

6. (Local Government Act 1974, section 26A(2), as amended). In this case, Mrs X is Mrs Y’s personal representative.

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How I considered this complaint

7. I considered information from the Complainant and from the Council.
8. I sent both parties a copy of my draft decision for comment and took account of the comments I received in response.

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What I found

Background

Charging for permanent residential care

9. The charging rules for residential care are set out in the “Care and Support (Charging and Assessment of Resources) Regulations 2014”, and the “Care and Support Statutory Guidance 2014”. When the Council arranges a care home placement, it has to follow these rules when undertaking a financial assessment to decide how much a person has to pay towards the costs of their residential care.
10. The rules state that people who have over the upper capital limit (currently £23,250) are expected to pay for the full cost of their residential care home fees (self funding). Councils must not pay towards the cost for people who are self funding. However, once their capital has reduced to less than the upper capital limit, they will pay a contribution towards their fees. The council must assess the means of people who have less than the upper capital limit, to decide how much they can contribute towards the cost of the care home fees. People in a care home will contribute most of their income towards the cost of their care and support.
11. When people first become a permanent resident in a care home, the value of their property will be disregarded for the purposes of charging for 12 weeks. This is known as the 12 week property disregard. This is intended to give time to decide what to do with the property and avoid the need to sell a home at a time of crisis.
12. When a council is meeting the person’s 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.

Deferred payments

13. The Care and Support Statutory Guidance 2014 also sets out details of deferred payment agreements (DPAs) and local authorities’ responsibilities around them. DPAs are designed to prevent people from being forced to sell their home in their lifetime to meet the cost of their care.
14. Local authorities should offer a DPA scheme to people who would be assessed as self funding if their home was sold.
15. There are two types of deferred payment agreement:
• the local authority pays the care home directly and defers the charges to be repaid on sale of the property (traditional type).
• the person pays the care provider for their care and the local authority loans the cost of care in instalments, less any contributions (loan type).
16. The local authority takes a legal charge on the home so it can be sold later and the authority repaid from the proceeds. If the cost of the placement exceeds the amount the authority has allocated for the personal budget, the top up may be added to the deferred amount if sustainable. However, the local authority is only required to cover the costs of care and support which it considers necessary. The property must be sold on the person’s death if it has not already been sold.
17. Local authorities should assure themselves that residents will be able to pay back the deferred amount including any top up when the property is sold. They must also have adequate security in place when entering into the agreement. They must, at a minimum, provide people with 6-monthly written updates. This should include the amount of fees deferred, interest and administrative charges accrued to date, and the total amount due and the equity remaining in the home.
18. Local authorities have responsibilities to provide information and advice about people’s care and support which is clear and easy to understand. This includes information about DPA schemes which should be provided at the earliest opportunity during the 12 week disregard. The minimum information provided should include:
• Clear information that fees are being deferred or delayed and must still be paid back at a later date, for example through the sale of the home (potentially after the individual’s death).
• That if a home is used as security, the home may need to be sold at a later date to repay the amount due.
• If, and how, interest will be charged on any amount deferred.
• What happens on termination of the agreement, how the loan becomes due and their options for repayment.
• The implications that a deferred payment agreement may have on their income, their benefit entitlements, and charging
• An overview of some potential advantages and disadvantages of taking out a deferred payment agreement (DPA).
• Suggestion that people may want to consider taking independent financial advice (including flagging the existence of regulated financial advice).
• That they will need to consider how they plan to use, maintain and insure the property if they take out a DPA.
19. Local authorities should invite those who help people decide about their care and how to pay for it, to discussions about this. It should ensure they receive clear and easy to understand information to help them to decide.

What happened

20. Mrs Y owned her own home and became a permanent resident in a care home. Mrs X has joint powers of attorney for Mrs Y, with her sister. The Council says it sent Mrs X a letter on 29 December 2016, about deferred payments, giving an outline of the deferred payment scheme. The letter is not signed and still has comments inserted for guiding completion; it says factsheets were enclosed along with a draft DPA agreement though I have not seen these. The letter said: “the purpose of the scheme is to help people in long stay residential care who may wish to delay selling their property”. It suggested this might allow a relative to continue living in the property or renting the property to create extra income. It recommended seeking independent legal advice and gave details of Age UK and the Citizen’s Advice Bureau. Mrs X returned the second page of this letter, signed, to register an interest in a DPA. The letter also said:
• “Should the property be sold at any point in the future then please advise me as, assuming value of the total capital is above £23,250, it will be necessary for the Council to terminate the existing contract and your mother enter into a private contract with the home. You should also bear this aspect in mind when considering your intentions in respect of the property as, in the event that the property is sold and the Council terminate the existing contract, [the care provider] may implement, by way of the new private contract, a weekly fee which is greater than the current Council contracted sum”.
• “As part of the process you will have the opportunity to meet a Visiting Financial Assessment Officer” who will “be able to discuss the advantages and disadvantages of the DPA” and how it works.
21. The Council also wrote to Mrs X on 21 March 2017, this letter says “My understanding is that based on current circumstances you may wish to proceed with an application for a DPA”. The letter set out details of Mrs Y’s financial circumstances and advised how her benefits might be affected. It detailed how the Council’s involvement would affect payments to the Care Provider and gave the amounts involved. The Council enclosed another letter with this, also dated 21 March, and apologised for not sending this sooner. The Council sent me this enclosure in its response to my draft decision. The letter sets out detailed information about charges for residential accommodation. It included information about the charging specific to Mrs Y’s circumstances. It says: “Please pay particular attention to the information outlined in the section headed up Information for Property Owners which includes important information in respect of the Deferred Payment Agreement scheme”.
22. At the start of my investigation, I asked the Council to send me copies of the information provided to Mrs X. The December 2016 and one letter from March 2017, are the only sources of information it sent me. In its response to my draft decision, the Council said it had not sent the attachments to the letter due to a technical problem. I also asked for its comments on the complaint, but it did not provide any.
23. The Council funded Mrs Y’s care from January 2017 until December 2017. There is a difference between Mrs X’s account and the Council’s. Mrs X believes she signed a draft DPA, but the Council has no record of this. The Council did not complete the DPA process but paid Mrs Y’s fees as if it had and did not have any security over the loan. The Council says it did not need to complete the process because in April 2017, Mrs X said the property was on the market. In January 2018, Mrs X sold the property and sent the completion statement to the Council. She says the value of the property has increased significantly since she sold it. The Council stopped paying Mrs Y’s care fees and the fees increased by over 60% because she became a ‘self funder’ paying the private rate.
24. Mrs X heard nothing more from the Council until July 2020 when she received a demand for £18,862.50 which was two months overdue. Mrs X complained to the Council who had sent the final invoice to the wrong address and Mrs X had not received it. Mrs X proposed a repayment plan.
25. At the end of October, Mrs X received a response to her complaint from the Council. Mrs X believed it suggested she was refusing to pay the outstanding amount. The Council later apologised for this and acknowledged that Mrs X had misinterpreted a comment; it said it did not intend to suggest this. The Council did not accept her payment plan proposal. It proposed she pay 50% of the debt and then £500 monthly. Mrs X did not accept this and said she was unhappy with the Council’s response to her complaint.
26. In December 2020, the Council issued a final response to Mrs X’s complaint. It agreed the Council was at fault in failing to ensure the documentation was in place to secure the deferred payment agreement, and to follow up missing documentation. It said the delays were unacceptable and the service Mrs X experienced was unsatisfactory. It apologised and said it confirmed that its systems and processes had been reviewed to ensure these issues do not occur again. It also agreed to write off the final invoice of £306.67 as a gesture of goodwill. It confirmed the total debt at £18,555.83. Mrs X proposed she repay £1,500 per month which the Council agreed. Mrs X says she has paid this as agreed but has heard nothing more from the Council debt recovery team as she had been told to expect.
27. Mrs X says she did not receive full information about the DPA. She says she was not aware she did not have to sell Mrs Y’s property as quickly as possible and could have rented it out. She said it was heart breaking having to sell the property and upsetting to know she could have kept it. In January 2018, when the Council should have taken the money, Mrs Y had a balance of £165,000 and Mrs X says the £18,862.50 would not have been so significant then. Mrs Y’s care fees had increased significantly as her needs increased so her funds had rapidly depleted. Mrs X was worried that she would need to move Mrs Y at nearly 100 years old as she did not have enough money left to keep her in the same care home. Mrs X told me this is her primary concern.

Was there fault which caused injustice?

28. I have decided that, on the balance of probabilities, the Council did send the letter in December 2016 despite it not being signed or fully completed. Mrs X signed and returned the expression of interest form which was part of the letter. The Council also provided some information about the DPA specific to their circumstances in its letter of March 2017. The Council was at fault for not setting up the DPA however, I do not consider this caused either Mrs Y, or Mrs X, any injustice.
29. I cannot say Mrs X would have chosen to delay selling the property had she had more information. I also cannot say it would have achieved a higher price if she had sold it later, or that she would have rented it out had she been clear about that option. It is likely, from the letter in 2016, that she would have known there was an option to rent the house out although the information is not detailed.
30. Without a DPA in place, the cost of Mrs Y’s care would be the same whether the Council took the money in January 2018 or July 2020. Mrs X was aware this money was due and could have contacted the Council to find out why it had not been taken. This would probably have triggered the Council to take the funds. However, the Council’s failure to take the money was fault and this caused Mrs X uncertainty and stress.
31. The Council is to be commended for writing off the final invoice of £306.67 which was suitable action to take however, this did not remedy any injustice to Mrs X.
32. It is concerning that the Council’s processes allowed Mrs Y to build up a significant debt without security when security was available.
33. Since my draft decision, Mrs Y has been admitted to hospital and will not be returning to the same care home as her needs have increased.

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Agreed action

34. To remedy the injustice identified above, I recommended the Council:
• Apologise in writing to Mrs X setting out the faults identified above and the actions it will take to avoid similar problems in the future.
• Pay Mrs X £150 for the uncertainty and stress it caused.
• Review its procedures to ensure eligible people who request a DPA have a DPA properly set up.
• Provide training to relevant staff to ensure they are aware of the correct procedures to follow.
• Complete these actions and send evidence to me within two months of my final decision. Suitable evidence would include a copy of the letter to Mrs X, confirmation of the payment and the guarantee, and an action plan showing progress on the remaining actions.

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Final decision

35. I have completed my investigation and uphold Mrs X’s complaints that the Council:
• Failed to properly set up a deferred payment arrangement.
• Significantly delayed sending the final invoice so Mrs X could settle the debt.
• Used the wrong address and failed to send correspondence.
36. I do not uphold Mrs X’s complaint that the Council did not provide her with enough information to understand her options around the deferred payment arrangement.

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Investigator's decision on behalf of the Ombudsman