Summary: Mr X complained the care provider, Parklands Care Services Ltd, unfairly and inappropriately increased his father, Mr F’s care fees. 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. This causes Mr X and all other residents and their representatives across the care provider’s care homes uncertainty about future care fee increases. The care provider agreed to review its contract to ensure it complies with the guidance and consumer law.

The complaint

1. Mr X complains on behalf of his father, Mr F who lives at Wyndthorpe Hall Care home (the care home) which is part of Parklands Care Services Limited (the care provider). Mr X complains the care home has unfairly and inappropriately increased his father’s care fees without proper explanation. Mr X says this caused him uncertainty and financial worry about future fee increases.

Back to top

The Ombudsman’s role and powers

2. 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)
3. If an adult social care provider’s actions have caused an injustice, we may suggest a remedy. (Local Government Act 1974, section 34H(4))
4. 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)
5. 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)
6. 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)
7. 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.

Back to top

How I considered this complaint

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

Back to top

What I found

Consumer law

12. 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.
13. 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

14. 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

15. 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.
16. 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.
17. 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.
18. 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.
19. 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

20. In 2019, Mr F, who has dementia moved into Wyndthorpe Hall care home (the care home) which is one of three care homes forming part of Parklands Care Services Limited (the care provider). Mr X is Mr F’s son and has Power of Attorney over his finances. As such, Mr X manages and administers Mr F’s care fees at the care home.
21. Mr F pays his own care fees and therefore entered into a private agreement with the care provider when he moved into the care home. The terms in the contract make specific reference to fees. It states that ‘fees are reviewed annually having regard to cost, inflation and local market circumstances’.
22. In March 2020 the care provider wrote to Mr X to inform him of upcoming fee increases for Mr F’s care. The letter said the ‘due to ever-increasing costs we had no choice but to implement this increase’. The letter informed Mr X of the new weekly rate which was an increase of £2,028 per year.
23. Mr X contacted the care provider to query why Mr F’s fees had increased after only being a resident for five months. The care provider responded and said pay rates had increased from April 2020 onwards. It also said items such as food, utility bills and medical items had increased so it had no choice but to increase care fees to ensure it continued to provide a high standard of service.
24. Mr X responded to the care provider with a formal complaint about the matter. He asked for a detailed summary of why it required a further £2,028 from self-funding residents such as Mr F. Mr X acknowledged that the care home provided Mr F with a good service and understood care fees increased over time but did not agree to this extent.
25. The care provider sent Mr X its final response on the matter in May 2020. It said it implemented assessments of running costs, wages, utilities, equipment and miscellaneous costs annually. It said it tried to keep increases in care fees to a minimum. The care provider said due to ever increasing costs in the areas it had previously identified, it had no choice but to implement the increase. It said the percentage increase was roughly in line with national fee increases.
26. Mr X remained unhappy with the fee increase and the care provider’s response so, he complained to the Ombudsman.

The care provider’s response to my enquiry letter

27. In response to my enquiry letter the care provider said it implemented a 6.39% fee increase across all of its three care homes. It said it considered wages, food, cleaning supplies, agency costs and utilities in arriving at its increase. However, it was unable to provide me with evidence of how it arrived at these figures or any records from its annual review meeting.

My findings

28. 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 as outlined in paragraphs 1519.
29. The terms in Mr F’s contract state ‘fees are reviewed annually having regard to cost, inflation and local market circumstances’. These terms in effect give the care provider unlimited discretion to increase its fees on an annual basis. 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. That is fault and causes Mr X uncertainty over the extent of future care fee increases.
30. 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 care provider’s contract is not in line with the CMA guidance and are likely not in accordance with consumer law. This therefore affects all of the self-funding residents across the care provider’s three care homes. This is further fault. This is likely to cause the other self-funding residents and their representatives’ uncertainty about what care fee increases the care provider may implement.

Agreed action

31. Within two months of the final decision the care provider agreed to reviews 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.
32. Within three months of the final decision the care provider agreed to issue its amended contracts to all new and existing self-funding residents.

Back to top

Final decision

33. I have ended my investigation. I found fault and the care provider agreed to my recommendations to remedy the injustice caused by the fault.

Back to top

Investigator's decision on behalf of the Ombudsman