Summary: Ms X complained about the result of a financial assessment. She said the Council has not accounted for her mortgage, which means she doesn’t have enough money to live on. The Council is at fault for failing to explain in detail how it treats different mortgages in its policy and applying this to Ms X’s case, causing her emotional and financial distress. It has agreed to a package of remedies.

The complaint

1. Ms X complained about the result of a financial assessment. She said the Council has not accounted for her mortgage, which means she doesn’t have enough money to live on. She also complained the Council has not properly considered her disability related expenditure (DRE). She would like the Council to reconsider its decision.

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The Ombudsman’s role and powers

2. 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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. 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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What I have and have not investigated

4. I have not investigated how the Council considered Ms X’s DRE. This is because she said thought how the Council treated the DRE was correct but unkind.

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How I considered this complaint

5. As part of the investigation I have considered the complaint and the information provided by Ms X.
6. I have made enquiries of the Council and considered its response along with relevant law and guidance.
7. Ms X and the Council had an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What should happen

8. A council has a duty to arrange care and support for those with eligible needs, and a power to meet both eligible and non-eligible needs in places other than care homes. A council can choose to charge for non-residential care following a person’s needs assessment. Where it decides to charge, the council must follow the Care and Support (Charging and Assessment of Resources) Regulations 2014 and have regard to the Care Act statutory guidance. (Care Act 2014, section 14 and 17)
9. Where a council has decided to charge for care, it must carry out a financial assessment to decide what a person can afford to pay. It must then give the person a written record of the completed assessment. Councils have no power to assess couples according to their joint financial resources. A council must treat each person individually. A council must not charge more than the cost it incurs to meet a person’s assessed eligible needs.
10. People receiving care and support other than in a care home need to keep a certain level of income to cover their living costs. Councils’ financial assessments can take a person’s income and capital into consideration, but not the value of their home. After charging, a person’s income must not reduce below a weekly amount known as the minimum income guarantee (MIG). This is set by national government and reviewed each year. A council can allow people to keep more than the MIG. (Care Act 2014)

What happened

11. I have summarised below the key events; this is not intended to be a detailed account.

History of the case

12. Ms X has a care and support plan and received care for roughly six years. Her plan included a personal assistant who provided care three mornings a week. They provided support maintaining the home, for example cleaning, washing and cooking as well as providing support at appointments and short trips.
13. During this time, Ms X received income support and did not have to contribute towards her care.
14. In March 2024, Ms X notified the Council her circumstances had changed. She was no longer entitled to receive income support; the Council said she could be assessed for universal credit instead. This triggered the need for a financial assessment.

The financial assessment

15. The Council conducted a financial assessment over the telephone in June 2024.
16. During the conversation, the financial assessor (assessor) asked Ms X about her housing costs. Ms X said she owns her own home which is subject to a mortgage. She said she remortgaged several years ago and borrowed extra money (around £4,000) to pay for a new roof and windows which was added to the mortgage. Ms X said she has remortgaged her property several times since then.
17. The assessor asked Ms X to submit evidence of the original mortgage so they could make an allowance for this within the financial assessment. The assessor said the additional borrowing which was added to the mortgage was a loan and not a housing cost and could not be considered within the financial assessment.
18. Ms X said she did not have any information from the original mortgage as it was many years ago. The assessor said the mortgage provider should be able to provide this information if Ms X requested it.
19. The assessor wrote to Ms X after the telephone conversation, confirmed what was discussed and asked for evidence of the original mortgage.
20. The Council did not receive any details or paperwork about the mortgage from Ms X. It therefore calculated the financial assessment without any details of her housing costs.
21. Ms X cancelled her care at the end of June. She said she could not afford to pay for it. In conversation with me, Ms X said she is struggling to manage without her care package. She told me she recently could not get out of bed one day as she exerted herself the previous day cleaning.

Ms X’s complaint

22. In late June, Ms X complained to the Council. She asked for a copy of the financial assessment policy and complained the Council would not consider her mortgage in the financial assessment.
23. The Council issued a stage one complaint response in early July. It provided a copy of the financial policy which it said is available online.
24. In response to Ms X’s complaint about how the Council treated her mortgage, it said ‘No allowances can made for loans including loans against a property, or other debts in the Financial Assessment.’
25. Ms X was not satisfied with the Councils stage one response and asked for a stage two investigation. The Council issued it response in late July. The Council did not uphold Ms X’s complaint. In response to Ms X asking for the section of the document which allows it to disallow her mortgage, it copied the following paragraph. It did not reference where this came from:
• The Council will ensure that people retain at least the ‘Minimum Income Guarantee’. This retained income level is designed to promote independence and social inclusion, and is intended to cover basic needs such as purchasing food, after housing costs have been taken into consideration. Direct housing costs will only be considered where the person is liable for such costs, i.e. holds the tenancy agreement or is party to the mortgage.
26. It went on to say as Ms X remortgaged her property, it becomes a loan for home improvements and this cannot be taken into account in the financial assessment. Only the original mortgage can be considered.
27. In July, the Council sent a bill to Ms X for the care received. She told me she has not paid this as she cannot afford it.
28. Ms X complained to the Ombudsman in August. She complained about how the financial assessment treated her mortgage and said the Council has not shown her where it says in the policy it can do this. She said she wants the Council to do a reassessment, she is happy to pay towards her care but does not agree with how it has been calculated.
29. In conversation with me, Ms X said her current mortgage is for one amount; it does not distinguish between the original mortgage and the extra money she borrowed. She said there is no reference in the paperwork to a loan.

Analysis

30. During the financial assessment, the assessor asked Ms X about her housing costs. Ms X owns her own home, subject to a mortgage. The Council must allow for housing costs and ensure an individual does not fall below the MIG. The Council did not consider Ms X’s housing costs when it completed its financial assessment. This is because Ms X told the assessor she remortgaged her property several years ago to pay for improvements. The assessor asked Ms X to submit details of her mortgage and said it would consider the mortgage for the property as a housing cost under the financial assessment but would not include any additional loans secured against the property. The assessor said the current mortgage provider should be able to provide this information. Ms X failed to provide the details as requested. Ms X did not follow the procedure as outlined by the assessor to assist with the financial assessment.
31. Ms X complained the Council considered her mortgage as a loan and not a housing cost. She asked the Council to explain where this was in its policy. In the stage one response the Council simply provided a copy of its policy but did not highlight the appropriate section. In its stage two response, the Council copied a paragraph into the letter but did not say which section this was in which document. Upon reviewing the Council’s policy, the wording can be found at section 5.8. The Council provided the information to Ms X, but did not help her navigate or understand it. I would expect the Council to signpost Ms X to the appropriate section of the policy.
32. The section of the policy which the Council says Ms X’s mortgage can be disallowed refers to the Minimum Income Guarantee; it says direct housing costs will be considered where the individual is liable for the costs for example, they are party to the mortgage. In this case, Ms X said she is liable for the mortgage, so on a simple reading of the policy, this should be considered as a direct housing cost.
33. The policy does not provide any detail or distinguish between an original mortgage and a loan secured against the property. It does not say only an original mortgage will be considered. Neither does it explain how this works in practice, for example, is it simply the loan secured against the property that is not allowed, or is it the whole mortgage? And what happens where the individual is not able to provide evidence of the original mortgage, as Ms X in this case? The policy does not establish the principle upon which the Council seeks to rely and neither does it provide any guidance on the practicalities. This is fault.
34. I asked the Council to indicate where this principle is established in statute or government guidance. It said the Care Act is silent on this point and the Council has made this decision using its own discretion. It explained it only makes allowance for the original mortgage and said this is a recognised conversation it has with clients. It said any remortgage linked to housing improvements would mean the Council pays for the improvements and not the housing cost. While the Council may have conversations with clients, I expect this to be explained in detail within the policy and explained in writing. It is not, this is fault.

Injustice

35. The Council’s reliance on a policy which is silent on how it treats mortgages and remortgages has caused Ms X confusion as she does not understand why her mortgage should not be treated as a housing cost. This has caused her financial distress as she cannot afford to pay for her care and emotional distress as she is frustrated and anxious about the process and outcome. This is her injustice.

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Agreed actions

36. Within four weeks of my final decision, the Council agreed to:
• Consider its position on housing costs, how it treats a loan secured against a property and whether this complies with statute and guidance.
• Update its policy to include detail on how it considers mortgages and loans secured against a property and how this works in practice.
• Provide an update to appropriate staff on the policy.
• Offer to conduct a fresh financial assessment for Ms X to determine charges for her care. Include Ms X’s appropriate housing costs and ensure she does not fall below the MIG.
• Postpone the collection of charges due under the bill for care until the new financial assessment has been completed and then recalculate the original bill. Should charges be due, offer a repayment scheme to Ms X.
• Apologise and pay Ms X £300 for the distress caused.
37. The Council should provide us with evidence it has complied with the above actions.

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Final decision

38. I have completed my investigation. The Council is at fault for failing to explain in detail how it treats different types of mortgages in its policy and applying this to Ms X’s case. This has caused her financial and emotional distress.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman