Summary: Mrs X complained the care provider, Peel House Nursing Home unfairly and inappropriately increased her mother, Mrs F’s care fees during 2021. The care provider was at fault. The terms in its contracts relating to fee increases are not in line with Competition and Markets Authority guidance which means it is likely they are unfair under consumer law. It also failed to issue Mrs F with a contract and did not provide Mrs X with an adequate explanation of how it calculated the care fees. The care provider agreed to apologise and pay Mrs X £300 to recognise the frustration, uncertainty and time and trouble the faults caused her. It also agreed to review its contract to ensure it complies with the CMA guidance and consumer law.

The complaint

1. Mrs X complained on behalf of her mother, Mrs F, who lived at Peel House Nursing Home (the care provider) between 2020 and 2021. Mrs X says the care provider unfairly and inappropriately increased Mrs F’s care fees without proper explanation.
2. Mrs X said the significant increase in fees meant she had to move Mrs F to a different nursing home and failed to adequately answer her complaint. She said this caused her distress and time and trouble.

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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. 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 26D and 34E, as amended)
6. We may investigate complaints from a person affected by the matter in the complaint, or from someone the person has authorised in writing to act for him or her. If the person has died or cannot authorise someone to act, we may investigate a complaint from a personal representative or from someone we consider suitable to represent the person affected. (section 26A or 34C, Local Government Act 1974)
7. If we are satisfied with a care 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)
8. Under the information sharing agreement between the Local Government and Social Care Ombudsman and the Care Quality Commission (CQC), we will share this decision with CQC.

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How I considered this complaint

9. I spoke to Mrs X about the complaint and considered her views.
10. I considered the care provider’s response to my enquiry letter.
11. I considered guidance produced by the Competition and Markets Authority titled ‘UK care home providers for older people – advice on consumer law’.
12. Mrs X and the care provider had an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

Regulations and guidance

13. Regulation 19 of the Care Quality Commission (Registration) Regulations 2009 says care providers should provide the resident or their representative with a written statement, ideally before the resident moves in. The statement should:
• Set out the terms and conditions of service, including the amount and ways to pay the fee;
• Include a contract.
14. Guidance by the Care Quality Commission, 'Guidance for providers on meeting the Regulations', explains:
• People must receive a written copy of the terms before their care and support begins;
• Care providers should tell people about any changes in terms and conditions in advance, including increases in fees. This is so people have time to consider whether to continue with the service;
• Care providers should give an estimate of costs if a fixed price is not possible. This should include details of additional costs.

Consumer law

15. Consumer law requires care homes to treat residents and their representatives fairly. Care homes must not mislead them, behave aggressively or otherwise act unfairly towards them. This obligation applies before as well as after the resident has moved in or signed a contract. It means care homes must do certain things, such as provide key information upfront, so residents and their representatives can make informed decisions.
16. Consumer law requires care homes to ensure contracts with residents are fair. Contracts must not put residents at an unfair disadvantage, by tilting the rights and responsibilities under the contract too much in the care home’s favour.

Competition and Markets Authority (CMA) guidance

17. The CMA has published guidance for care homes to help them comply with their consumer law obligations. The guidance applies specifically to care homes for people over 65 and covers the whole of the United Kingdom. The guidance states it is relevant for all care homes, irrespective of whether residents pay their own fees or are state funded.

Changes to residents’ fees during their stay: annual reviews

18. The CMA guidance states that for contracts between the care provider to be considered fairly balanced, residents should be entitled to receive the service they expect, on the agreed terms and not something that is, in any significant respect, different.
19. Consumer law requires that care providers specify at the outset, the circumstances in which the care provider may need to make changes without the resident’s consent. These circumstances should be clear and narrow in scope and effect.
20. The guidance says fee increase terms need to be treated with great care, in particular so that they do not allow care providers to increase fees arbitrarily. Terms which give care providers broad discretion to increase fees are likely to be unfair. To ensure compliance with consumer law, care provider fee variation terms must set out clearly the circumstances in which the resident’s fees may change and the method of calculating the change.
21. The guidance states that terms must be transparent, unambiguous and not allow care providers to arbitrarily increase their costs in a way that the consumer could not have reasonably foreseen. Simply stating in the terms of a contract that fees may go up as a result of ‘increased costs’, ‘local market conditions’ or ‘the wider national economic picture’, will not make the terms fair. This type of general wording is both unclear as to what residents can expect and is open to misuse. This is because residents can have no reasonable certainty over what the increases will be.
22. The guidance says fee variations should be agreed contractually in advance and prior to a resident accepting an offer of a place. The term should specify the circumstances in which a fee increase will arise and the method of calculation. It says best practice is to consider fee variations by reference to a relevant, objective, and verifiable published price index.

What happened

23. In 2020 Mrs F moved into Peel House Nursing Home (the care provider) after her husband passed away. Mrs F does not have mental capacity and therefore could not care for herself at home. Mrs F’s initial period at the care home was arranged by social services at a rate of £708 per week, however this increased to £1000 per week in October 2020 after Mrs F became a full cost paying resident.
24. The care provider has its own contract for full cost and self-funding residents. There is no evidence the care provider provided Mrs F or Mrs X with a contract when Mrs F became liable to pay her own fees as a self-funder. The standard contract however makes reference to fees. It says ‘fees will be reviewed from time to time as determined by the Management’
25. In March 2021 the care provider wrote to Mrs X and notified her of a further fee increase for Mrs F. The letter gave 28 days notice that Mrs F’s fees would increase from £1000 to £1250 per week which would take effect from mid-April 2021.
26. Records show the care provider send Mrs X an invoice in April 2021 which reflected the change in fees. In mid-April Mrs X wrote to the care provider to question whether the fee increase was a mistake. The care provider wrote back to Mrs X and said ‘the fee increase is in line with the current increase across the board from food, utilities, insurance and many other. Our fees are in line with what other care home charge in the local area’.
27. Mrs X questioned the care provider’s rationale for such a large percentage increase. Mrs X asked how it had calculated the fee increase which she said was 17 times greater than the inflation rate of the consumer price index. Mrs X said she did not agree to the increase without more information and asked for further explanation.
28. At the end of April 2021 Mrs X moved Mrs F to a different care home. This meant Mrs F was charged the increased rate of £1250 for two weeks before she moved out. The care provider said it waived its 28-day notice period as a gesture of goodwill.
29. In early May 2021 Mrs X wrote to the care provider and asked for a refund of £535.71 which she says was the fees Mrs F paid at the increased rate which Mrs X did not agree to. The care provider responded and said it had given Mrs X a 28-day notification of the proposed increase before implementing it, therefore it would not issue a refund.
30. Mrs X responded to the care provider. She said she had asked it to explain how it calculated the increase on three occasions without an adequate response. She said it had failed to provide Mrs F with a contract and therefore has no explanation of how, or when the care provider carries out its yearly fee reviews.
31. The care provider responded and said its letter in March clearly stated its intention to implement the fee increase in April. It said Mrs X should have moved Mrs F to another care home within this period if she was unhappy with the proposed increase. It told Mrs X the increase was due to ‘staffing, agency, food, insurance etc. The prices have been exacerbated due to the pandemic’.
32. Mrs X remained unhappy with the care provider’s response and complained to us.

My findings

33. It is not for us to tell a care provider what its fees should be or to tell it whether it is appropriate to raise its fees or by how much. Care providers are entitled to increase care fees and ultimately, if residents or their representatives are unhappy, they are entitled to leave. However, care providers must still implement fee increases in a way which is line with consumer law and CMA guidance.
34. The care provider has a standard contract which it says it issues to all of its self-funding residents. However, there is no evidence it provided Mrs X or Mrs F with a contract during her stay at the provider’s home. This is not in line with relevant regulations or guidance and is fault. It caused Mrs X uncertainty and frustration.
35. The care provider’s standard contract states ‘fees will be reviewed from time to time as determined by the Management’. These terms in effect give the care provider unlimited discretion to increase its fees whenever it likes. The terms do not explain to residents or their representatives the circumstances in which fees may change or the method of calculating the change. It means prospective residents, current residents or representatives cannot foresee fee changes or understand the practical implications of them. The terms are not in line with the CMA guidance which says terms such as these are likely to be unfair under consumer law which is fault.
36. The care provider gave Mrs X sufficient notice about the proposed increase in fees and waived the 28-day notice period when Mrs X decided to move Mrs F to another care home. So, there is no fault in care provider’s decision not to refund the two weeks fees paid at the increased rate. However, the lack of contract and the care provider’s poor explanation regarding how and why it increased the fees caused Mrs X frustration and the time and trouble moving Mrs X to another care home. I have therefore made recommendations to remedy this injustice below.
37. 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. The evidence shows the terms around fees in the care provider’s contract are not in line with the CMA guidance and are likely not in accordance with consumer law. This therefore affects all of the care provider’s self-funding residents. This is further fault and is likely to cause the other self-funding residents and their representatives’ uncertainty about what care fee increases the care provider may implement.

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Agreed action

38. Within one month of the final decision the care provider agreed to apologise to Mrs X and pay her £300 to recognise the frustration and uncertainty caused by the failure to issue a contract and its poor explanation of how it calculated its fee increase in April 2021.
39. Within two months of the final decision the care provider agreed to review its contracts to ensure they comply with the CMA guidance in relation to fee increases. In particular it should ensure its contracts clearly explain the fee variation terms, the circumstances in which the resident’s fees may change and the method of calculating the change.
40. Within three months of the final decision the care provider agreed to issue its amended contracts to all new and existing self-funding residents.

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Final decision

41. I completed my investigation. I found fault and the care provider agreed to my recommendations to remedy the injustice caused by that fault.

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Investigator's decision on behalf of the Ombudsman