Summary: Mr B applied for a deferred payment arrangement for residential care fees. The Council rejected it because of a first charge on the property but did not say what other types of security it may accept. This goes against the requirements of the care and support statutory guidance; the Council must have a publicly available policy explaining what types of alternative security it will consider and must clearly explain this. The outcome may have been the same, as the Council may have declined any alternative. The Council will apologise to Mr B for failing to have the relevant policy and failing to give him adequate advice. The Council will produce the required policy and remind staff they must tell people about alternative options of security for a deferred payment arrangement.

The complaint

1. The complainant, who I will call Mr B, says the Council refused to agree a deferred payment agreement for his sister (Ms C’s) residential care charges. The Council refused because of a first charge on the property, despite having discretion to consider other adequate security. Mr B says the Council was unwilling to respond, or even comment, on the information Mr B gave it about its responsibilities under the care and support statutory guidance. Mr B says instead the Council insisted the onus was on Mr B to come back to the Council with a suggestion of alternative security, but the Council never told him about this.
2. Mr B says it was a stressful time ensuring to pay the care home fees. Mr B says he used his own money to ensure his sister could remain living at the care home. Mr B says Ms C was distressed thinking she would have to leave the care home and return to her home if she could not pay the fees; Ms C was worried about being a burden if she returned home. This worry delayed Ms C’s integration into the home and left her unsettled.

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The Ombudsman’s role and powers

3. 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)
4. If we are satisfied with an organisation’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

5. I considered:
• Information provided from Mr B and the Council.
• The Care Act 2014 and associated ‘care and support statutory guidance’ published by the Department of Health & Social Care.
6. Mr B and the organisation 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

What happened

7. Ms C moved into a care home and funded her own care fees, the Council do not contribute towards care home fees if the person has more than £23,250 in capital.
8. Mr B had power of attorney to manage Ms C’s finances. When Ms C’s money went below the £23,250 threshold Mr B contacted the Council for support. Mr B asked for a deferred payment arrangement (DPA). This is a loan or arrangement with the Council that is secured against your home at a fixed interest rate, it is repaid after you die, and your home is sold. So, you can pay your care fees without selling your home.
9. Ms C owned a house with a mortgage. The mortgage lender had the first charge on the property, so the Council could not secure a first charge.
10. The Council told Mr B it could only offer a DPA if the first charge was removed from the property. The Council sent Mr B information about DPA’s, a list of independent financial advisers he could contact for information and support, and a form to complete subject to the first charge being removed. Mr B did not respond, and the Council considered the case was closed.
11. Mr B later found out the care and support statutory guidance says the Council has discretion to consider other forms of adequate security. Mr B contacted the Council and asked why it did not consider this. The Council said it cannot offer financial advice, it cannot presume a client may hold capital in an undeclared item, and it was up to Mr B to offer suggestions or evidence of other types of security, which Mr B did not do.

What should happen

12. The Council must ensure that adequate security is in place for the amount being deferred, so it can be confident the amount deferred will be repaid in future.
13. The care and support statutory guidance says “9.16 A local authority may refuse a deferred payment agreement despite someone meeting the qualifying criteria:
1. where a local authority cannot secure a first charge on the person’s property
2. where someone is seeking a top up
3. where a person does not agree to the terms and conditions of the agreement, for example a requirement to insure and maintain the property”
14. The Council has discretion to consider other forms of adequate security. The Council should consider whether another type of security could be provided if a person cannot secure their deferred payment agreement with a charge on a property.
15. The guidance says “9.66 Under the discretionary scheme, local authorities have discretion to decide what else may constitute ‘adequate security’ for a deferred payment agreement, in cases where a first charge cannot be secured. A local authority’s decision should be based on an explicit and publicly accessible policy of what other types of security they are willing to consider in addition to a first charge, but local authorities may consider the merits of each case individually. Other forms of security a local authority may choose to consider include (but are not limited to):

• a third-party guarantor – subject to the guarantor having / offering an appropriate form of security
• a solicitor’s undertaking letter
• a valuable object such as a painting or other piece of art
• an agreement to repay the amount deferred from the proceeds of a life assurance policy”

16. “9.67 A local authority has full discretion in individual cases to refuse a deferred payment agreement if it is not satisfied that adequate security is in place”
17. Under the Care Act, local authorities have responsibilities to provide information and advice about people’s care and support. These extend to deferred payment schemes as well.  The local authority must provide information in a way which is clear and easy to understand, and it should be designed to ease the process of transition for people, their carers and their families. The Council must tell them about the DPA scheme and how it works. The care and support statutory guidance sets out the minimum expectations the Council should explain, one of which is “explain the types of security that a local authority is prepared to accept (as set out by each local authority in a publicly available policy)”

Was there fault causing injustice?

18. I must now consider whether there was fault by the Council which caused Mr B injustice. Ms C has since died so I cannot consider any impact she suffered as we cannot provide her with a remedy.
19. The Council does not have an explicit and publicly accessible policy of what other types of security it is willing to consider in addition to a first charge, as required by the care and support statutory guidance. This is fault.
20. Without this policy to refer to the Council did not consider its discretion on what might be adequate security in Ms C’s case. The Council says Mr B did not offer any alternatives; but he did not know he could. The Council is the expert and should provide adequate information to the person. The guidance requires the Council to provide information and advice which explains the types of security it would be prepared to accept. The Council failed to do this.
21. The Council has no evidence to show how it considered its discretion.
22. We cannot now know whether the outcome may have been different. Mr B has not explained what alternative security he would have suggested, and we do not know whether the Council would have accepted any suggested alternative as adequate to go ahead with a DPA. This leaves Mr B with uncertainty, and a feeling the Council has treated he and Ms C unfairly.
23. Mr B says he had to use his own money to pay care fees to ensure Ms C could remain living in her care home. That situation may have been the same regardless of the identified fault, if the Council decided there was not an adequate alternative security to go ahead with a DPA. Ms C has since died, so Mr B should have been able to recover any money owed to him from her estate.
24. It is worrying the Council only refers to the care and support statutory guidance and says it does not need a localised policy. The care and support guidance is clear that each local authority should have a policy that is publicly accessible and explains the types of security it will accept. Different councils may choose to exercise their discretion differently and must be clear on the criteria applied to be consistent and fair.
25. We are not saying the Council should provide independent financial advice, the Council is correct to say that is not its role. But those entering care often do so at a time of great stress and urgency. The Council is the expert in the field and must give clear advice and information to support people at a vulnerable time. It is unfair of the Council to say Mr B did not offer any alternative security, so it did not consider it, when it never told him this was an option. At the least it should have had an available policy to direct him to.
26. The Council failed to recognise this when Mr B brought it to its attention, had it done so Mr B might have avoided the time and trouble coming to the Ombudsman.

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Agreed action

27. To acknowledge the impact on Mr B and to prevent future problems, the Council will:
1. Apologise to Mr B for failing to have the required policy, failing to explain the types of security the Council would accept, and for saying the onus was on him to put forward an alternative form of security when it had not told him this was an option.
2. Create an explicit and publicly accessible policy of what other types of security the Council is willing to consider in addition to a first charge, in accordance with the requirements of the care and support statutory guidance.
3. Tell relevant staff of the requirements in the care and support statutory guidance section 9.30 detailing the minimum information it must explain, including the types of security it is prepared to accept. The Council may need to issue some interim guidance to staff on this issue until the required policy is complete.
28. The Council should apologise to Mr B, and issue the reminder to staff, within one month of the Ombudsman’s final decision. The Council should complete the new policy within three months. The Council must evidence its compliance to the Ombudsman.

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Final decision

29. I have completed my investigation on the basis the agreed action is sufficient to acknowledge the impact on Mr B and to prevent future problems.

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Investigator's decision on behalf of the Ombudsman